The Phantom is born as Erik in Boscherville, a small town not far from Rouen. His father was a well-known stonemason and died in a construction accident a few months before he was born. His mother was the beautiful and talented daughter of an English woman and a French architect. A spoiled and vain woman, she scorned her deformed child from birth and refused to name him. Instead, she instructed the elderly priest who baptised him to name the child after himself. Due to his mother's shame but also for his own safety, Erik was forced to spend his childhood locked in his home lest he or his mother become a target for the violent attentions of the very superstitious villagers of Boscherville.

Much of the verbal and physical abuse Erik suffered from his mother is chronicled in the opening chapters of the novel. One such event occurs on his fifth birthday when Erik refused to wear the cloth mask to the dinner table. His mother drags him before the only mirror in the house in retaliation and upon seeing his visage, Erik mistakes his reflection for that of a horrible monster. He shatters the mirror, lacerating his hands and wrists, and his mother is unable to bring herself to tend to his wounds. A family friend, Marie Perrault, bandages the wounds and saves his life, but Erik is left forever physically and emotionally scarred from this event. After this, Erik becomes morbidly fascinated with mirrors and believes that they are capable of performing magic. This fascination turns into an obsession and Erik quickly becomes a master of illusion, able to make people see only what he wants them to see.

From a young age, Erik exhibited a strong interest in architecture and was privately tutored by a well-respected professor. However, his strongest abilities lie in the subject of music and he is an incredibly talented composer and performer. However, his mother does not encourage his pursuit of singing, claiming that his supernaturally beautiful voice cannot be one created by God.

When he was nine years old, Erik's mother began to receive the attentions of the handsome, new town physician. This doctor made it clear that he believed that a child such as Erik belongs in an institution for the mentally insane and Erik began to desperately try to win his mother's affections. He used his rapidly developing skills of ventriloquism to create the illusion of a perfect home and family. His mother begins to surrender her links on sanity but is forced to awaken when an attack on her home by a superstitious mob of villagers leaves the family dog, Sasha, dead and Erik seriously injured. The doctor comes to Erik's aid and saves his life, but begs his mother to send her child to an institution and marry him. Experiencing a sudden change of heart and pangs of remorse, Erik's mother cannot bring herself to abandon her child and refuses the proposal. She resolves to make amends for her treatment of her child, but discovers the next morning that Erik had run away. It is much later in the novel that it is revealed that Erik left believing that she had accepted the proposal of the doctor and had hoped to free her so that she may live happily.

After a week or so without food and still healing from the attack, Erik stumbled upon a Gypsy camp in the woods. He is discovered as a thief and is unmasked. Upon seeing his severely deformed face, a freak show showman decided to exhibit him as the "Living Corpse" and Erik was forced to spend the next several weeks locked in a cage. Eventually, he gained some personal freedoms such as his own tent as he developed his show to include the illusions that he had begun to master as a child in Boscherville. He traveled around Europe with the Gypsies and mastered their languages as well as their herbal remedies. His quick mind and inhuman abilities garnered him the fear of many of the Gypsy tribe. He remained with the tribe until he was about 12 years old, leaving only after he was forced to murder his owner in order to evaderape.

Erik continued to join up with travelling fairs and while performing at a fair in Rome met Giovanni, a master mason who would take the boy on as his apprentice. Erik quickly mastered the aspects of the design and construction of buildings and stayed with Giovanni until he was 15. He spent a few happy years under the man's tutelage, but was forced to leave when he was inadvertently involved in the death of Luciana, Giovanni's youngest and favorite daughter. Erik's whereabouts are unknown for several years after this event, but it is assumed that he continued to travel throughout Europe and into Asia, occasionally performing with travelling fairs.

Erik was sought out by the Daroga of Mazanderan Court and became a court assassin, magician, and personalengineer to the Persian Shah. He was responsible for the entertainment of the Khanum, the Shah's mother, and built sophisticated traps and torture devices for her amusement. He also was involved in the design and construction of a palace for the Shah. He also involved himself in political affairs which made him a target for a poisioning attempt from which he nearly died. Much of these years were a personal hell for Erik and he soon became an opium addict. For fear of ruining his voice, Erik eventually stopped using opium and switched to.

After construction on the palace was finished, the Shah feared that Erik knew too many of his personal secrets and, with the influence of the Khanum, arranged to have him arrested and brought to death. Nadir, the Daroga who befriended him, helped him escape the guards and Erik eventually made his way back to France.

Erik wished to be the designer of the Paris Opera House. Unfortunately for him, the contest for the position was over by the time he found out about it. He went to the winner, Charles Garnier, and made a deal with Garnier wherein he could help design and build the Palais Garnier Opera House. Below the Opera House, an artificial lake had been created during its construction using eight hydraulic pumps because of problems with the ground water level that kept rising. Without anyone noticing, Erik built a maze of tunnels and corridors in the lower levels. Past the underground lake, he built a lair for himself, where he could live protected from the public. Ensconced here, he rode out the strife and misery of the 1871 Paris Commune.

Besides being a brilliant inventor and engineer, Erik was also a musical genius, and he started to visit the opera house in order to listen to operas and interfere with the manager's bad taste. Because he could not show his distorted face in public, he took the disguise of a ghost, using violence in order to blackmail the opera managers and bind them to his will. He exploited the employees' superstitions and his knowledge about the building's secret passages, allowing him access to every part of the building without being noticed. He terrorized those who refused his demands and even killed people as warnings. However, he treated those who were loyal to him and obeyed his command, such as Madame Giry, very kindly.

The remainder of the novel is a retelling of the primary plot of Leroux's novel, which concerns the relationship between Erik and Christine Daae, the talented chorus girl he becomes obsessed with. Their history is primarily retold through alternating chapters of first-person narration by Erik or Christine, just as earlier sections were narrated by Erik's mother, Nadir, Giovanni and Erik himself. Significant variations on the theme of the original novel include Erik's continued reliance on opiates, his experience of painful spells which seem to be heart attacks and Christine's overtly sexual response to his opera Don Juan Triumphant. An epilogue set several years after the conclusion of the novel's main events is narrated by Raoul, Christine's childhood sweetheart and eventual husband.