The Subtle Knife opens in a world very much like our own. A young boy named Will Parry is bringing his ill mother to stay with Mrs. Cooper, Will’s old piano teacher. Mrs. Cooper reluctantly agrees to take care of Mrs. Parry for a little while. Will returns to his house, where he lives alone with his mother. Men have been coming to the house looking for letters that Will’s father wrote to Will’s mother, and Will wants to find them before the men do. Just before Will finds the letters, the men arrive at the house. Will escape with the letters, accidentally killing one of the men along the way.
Will runs until he finds himself on a strange street. He sees a cat that reminds him of his own cat. The cat jumps through a window in the air, and Will follows her through and discovers that he is in a new world. The city he finds himself in seems to be deserted. Will seeks refuge in a small house, and there he meets Lyra. The pair are initially frightened of one other because Lyra has never seen anyone without a daemon and Will has never seen a daemon.
Elsewhere, Serafina Pekkala sees Mrs. Coulter torturing a witch to find out what the witch knows about Lyra. Serafina kills the ailing witch to prevent her from telling Mrs. Coulter what she knows. Serafina goes to Svalbard, where she meets Lord Asriel’s servant, who tells her that Lord Asriel means to start a war with God. Serafina flies back to her clan and to Lee Scoresby. Ruta Skadi, the queen of the Latvian witches, has joined them.
Lee Scoresby says that he is going to look for a scientist and explorer named Stanislaus Grumman. Serafina and her witches decide that they need to summon other witch clans to fight on Lord Asriel’s side and protect Lyra. Ruta Skadi will go to Lord Asriel to see what he is really doing.
Back in the new world, Lyra and Will meet two children named Angelica and Paolo. They tell Will and Lyra that the city they are in is called Cittàgazze (or Ci’gazze), and that it is filled with specters, which are wraiths that feed on adults. Specters cannot harm children and children cannot see specters.
Lyra and Will agree to go to Will’s Oxford. Lyra wants to find a physicist who can tell her about Dust and Will wants to find out more about his father, an Arctic explorer who disappeared before Will was born. Will’s mother always said that Will would take up his father’s mantle.