The protagonist is a little boy with golden hair and bright blue eyes. He lives with his widowed mother in a little cottage; she supports them by gleaning in the fields after the harvest. When the boy is eight years old, however, the woman becomes ill and can no longer earn her way. Her son says he will go to the local squire to find work, despite his youth. In place of his usual rags, the mother makes her son a new suit out of an old blue gown.
So dressed, the boy meets the squire and his daughter, Mistress Madge; the young woman is delighted with the child, calls him Little Boy Blue, and prevails upon her father to help. The squire makes the boy his shepherd; equipped with a silver horn to call the animals to him, he has the responsibility of keeping the livestock out of the planted fields and meadowlands.
Little Boy Blue is diligent at his work. His mother recovers enough to meet him when he comes home each evening. Yet, since "no life can be so happy but that sorrow will creep in to temper it," the woman slips on a stile one evening, and breaks her leg. Little Boy Blue has to rush to the village for a doctor, who comes to treat the injury. It is not a bad break, but the woman must convalesce until it heals. She insists, though, that her son go to work the next day.
After being awake most of the night, the boy tries to stay awake during the day too, but eventually falls asleep in the shade of a haystack. The animals find their way into the crops, and the squire is angry. Mistress Madge, however, learns the real circumstances of his case. The mollified squire forgives the boy; his daughter sends her maid to care for the injured mother. Soon the little family is moved to a new cottage on the squire's estate. Little Boy Blue "did more for his mother by falling asleep than he could had he kept wide awake;" he goes on to become a faithful shepherd, and then a young man with a farm of his own.
"Little Boy Blue" is one of the twelve tales in the collection with a Maxfield Parrish illustration.