This book is based upon characters and events originally developed and portrayed in the television series "Twin Peaks", in which solving the murder of Laura Palmer was a central narrative focus. The Secret Diary of Laura Palmer is a recreation of a key element in "Twin Peaks", a completed and fleshed out version of the diary that was referred to and utilized in the series as a source of clues and information. Considered on its own merits, the book explores themes related to the nature and tensions of various dualities, most notably the tensions between good and evil, appearance and reality, and the physical and spiritual sides of existence.

The diary opens with an entry written on Laura's twelfth birthday, the occasion of her being given the diary. She describes her intention to enter into the diary "everything", including things she doesn't tell anyone else. As the narrative unfolds, Laura does exactly that, writing into her diary a succession of secrets, stories, revelations and musings that, as she says several times, she can't share with anyone else.

Laura has several main points of focus and/or concern, all of which play important roles in defining the story of her last four years of life and therefore are the primary elements of her diary entries. Two manifest early in the narrative. The first is a preoccupation with sexuality and the pleasures associated with it, which she feels are actually "bad" and shameful. These reactions to her sexuality are the result of the second point of concern at work in her life and, by extension, in her diary, the frightening presence of a man called BOB. In the diary's early entries, BOB comes across as a kind of malevolent spirit or ghost who lures Laura out of the safety of her home and into the nearby woods. While there, Laura's writings suggest, he taunts her with the contention that she is by nature a "bad" girl, and that as such, she belongs to him. Laura, as she becomes increasingly aware of the dangers associated with his presence in her life, fights harder and harder to defend the "good" part of herself from him. Eventually, she takes action to try to beat him at his own game, to accept and even celebrate the "bad" part of herself in order to protect the "good" part.

The diary suggests, however, that once she takes that action, Laura becomes more and more deeply involved with that "bad" part, rationalizing her actions by saying her protection of her "good" self is becoming stronger and stronger. In fact, as her diary entries reveal, she is burying it further and further beneath her actual enjoyment of the sex and drugs now being introduced into her life. Diary entries also reveal the increasing desperation fueling her descent into drugs and sex, desperation that emerges from her lingering desire to both be perceived as "good" and to actually be "good".

Eventually, as Laura's sexual activities and drug use become more extreme and as she enters into charitable work in an effort to be "good", BOB becomes a more active presence in her life. When BOB actually starts writing in her diary, engaging in dialogue with her, it starts to seem as though he is a manifestation of something internal, of dark desires and beliefs at work in the core of Laura's psyche as opposed to an external spirit or force determined to corrupt her. As Laura becomes increasingly aware of this aspect of BOB's presence in her life, she makes a couple of last-ditch attempts to live a "good" life. These efforts, however, are both paralleled and undermined by her increasing involvement with drugs, extreme sexual activity, and eventually prostitution.

As Laura's diary entries become more incoherent, the book incorporates "missing" pages, suggesting that in the actual diary (of which the book is, ostensibly, a reproduction), those pages were torn out by an unknown individual. There is significant irony here, in that at the point at which Laura is finally coming to terms with important truths about her life, truths that are, by implication, written about on the missing pages, someone is making an active effort to destroy her efforts at self-rehabilitation (i.e., tearing those pages out). The book concludes with the statement that shortly after the final entry, in which Laura's fear and despair are evident, "she was found dead".