As chapter one opens, a mysterious man named Jack whose hair and eyes are "dark" and who "wore black leather gloves of the thinnest lambskin" has just murdered three members of a family. He climbs to the attic to knife the final member, a baby boy who has just learned...
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to walk. However, when Jack stabs the figure in the crib, he realizes it is a teddy bear.
The baby, who likes to wander, had taken a late-night walk to the graveyard, where Jack also heads. Jack's job is not finished until he kills everyone in the family.
Silas drives Jack away from the graveyard. Silas is neither dead nor alive, and the chapter hints that he is a vampire: he doesn't eat human food, and he sleeps by day. He is the only undead person to have the "Freedom of the Graveyard."
In the graveyard, Mr. and Mrs. Owens decide they wish to adopt the baby. They have been ghosts there for 200 years but have never had a child. They want the toddler to be granted the Freedom of the Graveyard. In a meeting, other ghosts protest that the Owens won't be able to feed to baby. Silas says he will bring food, and later he will get a banana for the baby. He also supports Mrs. Owens in wanting to give the baby the Freedom of the Graveyard, saying that it will “take a graveyard” to care for the baby.
When Death, the Lady in Grey, appears on her huge horse, she supports the idea of giving the baby, whom Mrs. Owen has named Nobody, the Freedom of the Graveyard. Mother Slaughter, Josiah Worthington, and other ghosts come to tell Mrs. Owen the Lady in Grey's good news that the baby can stay.
As we can see from the summary, Jack is an evil man whose purpose in killing the family is not yet clear. The Owens seem to be good-hearted ghosts, as does Silas, whoever he is. The graveyard is depicted as a full-blown community of ghosts (and Silas) with sociality, rules, and rituals. As the chapter ends, it appears that the Owens, Silas, and the graveyard represent good while Jack represents evil. Gaiman has set the reader up for a lively, if ghostly, tale.