Charming Billy by Alice McDermott is the story of Billy Lynch and the family and friends that surround him. The novel begins at a small bar in the Bronx after Billy's funeral where his family has gathered. Stories are told about Billy, of his first love and his wife, and of his struggles with alcoholism. A debate begins regarding the cause of Billy's alcoholism. Some believe it is a disease and no matter what happened in his life Billy would still have become an alcoholic. Others believe it was the loss of his first love, an Irish girl named Eva, which drove Billy to drink himself to death. However, his cousin Dennis knows better.

Dennis told Billy his love had died to spare him the truth. Eva decided to marry her childhood sweetheart and took the money Billy sent her to come to the States to buy a small gas station for her husband to run. Dennis thought he was doing Billy a favor at the time.

Dennis and Billy meet Eva and her sister, Mary, on the beach in a small bay not too far from a house Dennis's stepfather owns. It is love at first sight for Billy. Billy gives Eva a ring and promises to bring her and her family to the States since this is what she wants. Dennis eventually borrows the money Billy needs to bring Eva to the States from his stepfather and arranges for Billy to work in the stepfather's shoe store to pay off the loan. After the news of Eva's supposed death, Billy continues to work at the store and this is where he meets his wife, Maeve.

The night after the funeral, Maeve is upstairs napping while Billy's family is in her living room discussing old family gossip. Dennis comes to the house and immediately takes the dog out for a walk. When he returns, Maeve is convinced it is Billy's voice coming up the stairs to her. Maeve rushes down the stairs only to find Billy is still gone. It is only the monsignor from her local church who can calm Maeve after this episode.

After the reception at Maeve's house, Dennis and his daughter drive another cousin, Dan Lynch, home. Dan Lynch is an old bachelor who is also a romantic. Dan believes that Billy was a drunk because of Eva, the dead Irish girl. Dan believes if it had not been for Eva, Billy would have married and had a dozen children and been a happy man. As it was, Dan believes Billy never really loved Maeve and only married her to have someone to take care of him.

Billy, however, did find out that Eva was not dead. Thirty years after he met her, Billy travels to Ireland to take a pledge to stop drinking. While there, he decides to go see Eva's grave. Lost in the little town where she grew up, Billy stops at a gas station to get directions. It is at this gas station that he finds Eva, older and rounder now, happily alive. Billy returns to the Long Island house for the first time since he received news of her death and speaks to Dennis about his deception; he is not angry but resolved.

Dennis has suffered from the lie he told Billy. He too finds himself wondering if Billy's life might have been different had he not lied to him. Billy is romantic, full of poetry no one else really understands. Dennis tells himself it is this idyllic view of the world that has driven Billy to drink, not his own lie. However, when Dennis's wife, Claire, dies, he finds himself struggling with a complete loss of faith. It is only in his friendship and later romantic interest in Billy's widow, Maeve, that Dennis finally finds his faith again.