The taxi pulls up a steep hill to a house that sits off the side of the cliff, held there by spidery, metal-looking stilts.
They meet their new guardian, Aunt Josephine Anwhistle. Although she is a kind old woman, she is frightened by many things. Ever since her husband, Ike, died in Lake Lachrymose after being eaten by the Lachrymose Leeches, she has developed many irrational fears about the lake and her own possessions. She won’t touch the phone, the radiator, the refrigerator, the oven, or even the doorknobs. She also has a terrible fear of realtors. Aunt Josephine loves grammar and possesses an enormous library on the subject in her home. The room containing her library has an enormous window (after which The Wide Window is named), which overlooks the lake.
After the Baudelaires tell Aunt Josephine that Hurricane Herman is coming, the children and their new guardian head down to town to obtain food and other household supplies. There they come across “Captain Sham,” Count Olaf in disguise. He tells them that he is the owner of a boat rental company and lost his leg after it was eaten by the Lachrymose Leeches. The children warn Aunt Josephine, but they cannot prove “Sham” is Olaf in disguise, since he has a wooden leg where the ankle bearing his tattoo of an eye should be. Furthermore, Aunt Josephine finds Captain Sham charming, and won’t listen to the Baudelaires, insisting that his (fake) business card is proof enough of his identity. Later that night, the children are awakened by a loud crash, and they rush to the library to find the window broken and their aunt’s suicide note.
The three siblings are shocked because the note says that the children’s new guardian will be Captain Sham. Klaus becomes suspicious because it is filled with spelling and grammatical errors, not something Aunt Josephine would have done. They decide that Captain Sham is behind it and call Mr. Poe using the telephone. Mr. Poe arrives, but they cannot prove their suspicions, as the note is written in Josephine’s hand writing. While Mr. Poe and Sham are discussing matters at The Anxious Clown, the children purposefully start an allergic reaction with the peppermints Mr. Poe had given them, and escape back to the house. By this time, Hurricane Herman is already arriving on Lake Lachrymose. At the house, Klaus discovers that all the spelling and grammar mistakes in the note form an encoded message, the words “Curdled Cave”, presumably a cave somewhere on the shore of Lake Lachrymose. As the children search frantically for a map of the lake, one of the stilts that supports Aunt Josephine’s house is struck by lightning, and the house begins to slide down the cliff. After narrowly escaping with their lives, the Baudelaires watch as Aunt Josephine’s house crumbles and falls to the depths of Lake Lachrymose.
The Baudelaires hurry down to the docks to steal a boat from Captain Sham’s rental company, but the rental company is being guarded by one of Count Olaf’s henchmen, the one who looks like neither a man nor a woman. Sunny outsmarts it, and the children manage to sail across Lake Lachrymose to Curdled Cave, where they find Aunt Josephine hiding. Aunt Josephine claims that Sham forced her to write the note, but rather than actually committing suicide, she threw a chair through the window and went into hiding, leaving only the coded suicide note behind.
The Baudelaires convince her to join them, but as they’re sailing back across the lake, Lachrymose Leeches attack. The children are puzzled, since they haven’t consumed any food within the last hour (The leeches are blind and attack only if they smell food) but Aunt Josephine admits to having eaten a banana shortly before the Baudelaires arrived. The leeches ram their boat and devour it as it fills up with water. Violet successfully invents a signal for help, and Captain Sham rescues them in another boat just when the boat sinks in the water. Josephine pleads with Sham to spare her life, offering to give him the Baudelaires and promising to go far away and never tell anyone. Josephine almost convinces Sham to let her do so, but Sham is angered when she fusses over a trivial grammatical error in his speech. Instead, Sham pushes her in the water, where it is implied that she is devoured by the leeches, and takes the children with him back to Damocles Dock.
After being taken away from their horrible guardian Count Olaf, (who tried to steal their fortune), the three Baudelaire children are taken by Mr. Poe to their new guardian, Dr. Montgomery Montgomery, who lives on Lousy Lane, which smells like horseradish. According to Mr. Poe, Dr. Montgomery is the Baudelaire’s “late father’s cousin’s wife’s brother.”
Dr. Montgomery, or “Uncle Monty” as he prefers to be called, is a short, chubby man with a round red face. He invites the children in for coconut cream cake. He is much friendlier than Count Olaf, and gives the children free rein in the house. Each of the children can have their own room. Monty tells the children that they will be going on an expedition to Peru, once his new assistant, Stephano, arrives. He says that his old assistant, Gustav, had suddenly resigned (Gustav could possibly be Gustav Sebald).
The children are fascinated by the many snakes in the Reptile Room, a giant hall in which Monty’s reptile collection is stored.
They meet The Incredibly Deadly Viper, which Monty has only recently discovered. The snake’s name is a misnomer since it is harmless; Monty intends to use it to play a practical joke on the Herpetologist Society in revenge for their ridiculing his name, Montgomery Montgomery. The three children are each given jobs in the Reptile Room: Violet is given the job of inventing traps for new snakes found in Peru, Klaus is told to read books on snakes to help advise Uncle Monty and Sunny’s job is to bite ropes into usable pieces. She also befriends the Incredibly Deadly Viper.
When Stephano arrives, the children realize that he is Count Olaf in disguise. They try to warn Monty, but Stephano foils these attempts. Eventually, Monty does realize Stephano is evil, but believes Stephano to be an impostor sent to steal the Incredibly Deadly Viper. Monty explains this all to the astonished orphans and tears Stephano’s ticket to Peru up, saying that Stephano will not be going on the trip with them. Stephano threatens the children privately later, hinting at a plot he has for them when they reach Peru. They tell him that Monty won’t let him go with them and Stephano becomes furious. On the day they are to leave for Peru, they discover Monty’s dead body in the Reptile Room. He has two tiny puncture holes under his left eye, and Stephano claims that he has been bitten by a snake.
Stephano still intends to take the children to Peru, where he will more easily find a way to get his hands on their fortune. However, as they are leaving the estate, Stephano’s car crashes into that of Mr. Poe. They return to the house, where Poe and Stephano discuss what to do with the children. The Baudelaires try to prove that it was Stephano who killed Monty.
Meanwhile, the children realize that they’ll need evidence to expose Stephano’s scheme. Klaus and Sunny stage a diversion in which the Incredibly Deadly Viper pretends to attack Sunny to allow Violet time to find and open Stephano’s suitcase. Stephano blows his cover when he informs Mr. Poe that Sunny is not in danger as the viper is harmless; he had previously claimed he knew nothing about snakes. Violet shows up and presents Mr. Poe with the evidence (among other things, a powder puff and the syringe used to inject snake venom into Monty). Mr. Poe asks Stephano to display his ankle, where the tattoo of an eye should be. However, the eye is not there. The Baudelaires insist that he has covered it with makeup. Mr. Poe wipes the ankle with a handkerchief, revealing the eye. However, Olaf gets away before he is arrested.