A Dog's Purpose is told in the first person, that is, through the voice of the dog. The dog, who first appears as Toby, is a nice and relatively happy stray dog. He eventually finds himself in the home of an old woman, in a place he calls The Yard. There are other dogs there, some aggressive, and eventually the powers that be come and take the dogs away to be put to sleep, because of unsafe conditions.

The dog finds himself reincarnated, this time as Bailey, though at first he's without a name. He runs away from his mother and is found by a truck driver. The driver leaves him inside the truck when it's extremely hot. The dog is on the verge of dying from dehydration and heat exhaustion when he's rescued by a woman, who names him Bailey and brings him home to her young son, Ethan.

Bailey and Ethan have a long, happy life together, relative to the aging of dogs. Ethan goes through personal struggles, always with Bailey by his side. Bailey becomes old, and Ethan has him put down when he becomes sick and unable to live comfortably.

Next, Bailey becomes Ellie, a rescue dog who can find trapped people with her sense of smell. She doesn't have an owner, she has various handlers, all of whom Ellie likes. She is also happy with the purpose of helping unfortunate people. Eventually, she loses her smell after inhaling toxic fumes, and becomes an outreach dog at schools, working for the police department. She dies peacefully of old age.

Ellie next becomes Bear, adopted by a woman with an alcoholic boyfriend, who abandons him on the side of the road. Bear remembers his life as Ellie and is able to use the same tracking sense to find Ethan's home, which he realizes is near to where he is. He finds Ethan, who is older now. Ethan adopts Bear and names him Buddy. The live many years together happily, until Ethan develops an aneurysm. Close to death, in his final moments, Ethan has a revelation that Buddy and Bailey are the same dog. Buddy stays beside Ethan as he dies, having come full circle, to have been with the man he loved as young Ethan and had now deeply bonded with as older Ethan. As he's beside Ethan at his death, Buddy knows that he's finally fulfilled his purpose as a dog.