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The novel is divided into three parts. The preface, which forms the first part, serves to introduce the man whose autobiography is included in the novel. The Editor was acquainted with Harry Haller, because the man leased rooms in his aunt's boarding house. The nephew felt that Haller came from an alien world, for he did not try to fit in to the bourgeois society. Although the Editor at first felt uncomfortable around Haller, he gradually began to like him.
The Editor gives a lot of Background Information on Haller. Supposedly, he was once an eminent scholar of oriental mysticism; but when the Editor knew him, Haller lived in a disorganized manner with no regular eating or sleeping habits and he drank a lot. He also seemed to have a lot of self hatred, which the Editor blames on Haller's strict upbringing. The Editor also reveals that Haller had a split personality; he called his baser, animalistic self Steppenwolf. Because he suffered greatly from the duality, Haller was suicidal.
One day Haller suddenly left the boarding house, leaving behind a manuscript. Many people speculated that Haller was dead, but the Editor felt otherwise. As he began to work on the manuscript, the Editor believed that is was more than the story of one unhappy person. He thought that the tale applies to the society at large; therefore, he works towards it publication.
In the second part of the novel, entitled "Harry Haller's Records," Steppenwolf, the baser portion of Haller, begins his story with an account of a typically uneventful day. Longing to experience some strong emotion, he decides to visit a tavern. As he walks through the wet streets toward the tavern, he recalls the joys of his youth. He also recalls a recent symphony concert that he has attended. Usually, Haller dislikes any form of entertainment or modern life. When Haller sees an electric sign above an arched doorway in a stone wall, he reads that the place is called "Magic Theatre." There is also a warning given, "Entrance not for Everybody!" Filled with curiosity about the place, he wonders who should go in. He then sees the neon sign change to read, "For Madmen Only!" Haller is suddenly reminded of glimpses of eternity. Walking on to town, he sees other signs proclaiming entertainment for "everybody." He finally chooses a tavern and enters; he relaxes there for some time. He suddenly feels that it is only an "outsider" who can really appreciate literature, art, and history; Haller wonders if it is only a small group of people, including himself, who are keeping alive the spirit and culture of the past. After leaving the tavern, Haller finds himself back at the stone wall. This time there is no arched entry, as was there previously. Instead, there is a peddler with a signboard that issues an invitation to the Magic Theater. The man gives Haller a small book and disappears. Haller goes to his suburban home and settles down to read the book.