A Yellow Raft in Blue Water is the story of three women's lives, three strands of narration that, braided together, form the narrative history of Ida's, her daughter Christine's, and Christine's daughter Rayona's lives. Divided into three separate yet interconnected sections, each narrated by one of the female protagonists, Dorris' novel explores the perceptions and misperceptions that define each woman's search for self-identity.
If told in a linear fashion, Dorris' text would read something like the following. Ida, a young Indian girl raised on a Montana reservation, faces a crisis in her and her family's life when Clara, her mother's sister and therefore Ida's aunt, has a sexual affair with her brother-in-law, Lecon, her mother's husband and Ida's father. Clara gets pregnant with Lecon's child, and to conceal the illicit affair, Ida agrees to accept Clara and Lecon's child as her own.
When the child, who is named Christine, is born, Ida assumes full responsibility for raising it. She even gets a legal decree declaring that Christine is legally hers. Four years after Christine's birth, Ida has a brief sexual relationship with Willard Pretty Dog, and she gets pregnant with his child, whom she names Lee. Christine and Lee have a very close sister-brother relationship, each relying on the other for emotional support. However, as young adults, Christine emotionally blackmails Lee into enlisting in the military during the Vietnam War; Lee's best friend and Christine's rival for Lee's attention, Dayton, opposes Lee's enlistment.
Christine moves from Ida's house and the reservation to Seattle, moving from one menial job to another. She's devastated when she gets a letter from Dayton saying that Lee is missing in action. To console herself, she goes to a bar, where she meets a black soldier named Elgin. The two instantly hit it off and move in together, although Elgin is away from home because of his on-base military duties. When Elgin is released from the military, he and Christine begin what at first appears to be a meaningful life together. However, Christine gets pregnant, she and Elgin get married, and then Elgin begins staying out late after work and oftentimes not even coming home at night. He's having an affair, and Christine knows it. They both decide that their on-again, off-again relationship works better after they decide to live separately.
Christine gives birth to a baby girl, whom she names Rayona, immediately after she learns from another letter from Dayton that her brother, Lee, has been killed in Vietnam. Devastated by this news, she and Rayona return to the reservation for Lee's funeral ceremony. She and Ida, who has always demanded that her children call her Aunt Ida, argue bitterly, as they did while Christine was growing up. After Christine and Rayona return to Seattle, Christine decides that her life is worthless, and she determines that Rayona would have a better chance at happiness were she to live with Aunt Ida. Christine and Rayona again drive to Ida's home on the reservation, where Christine basically abandons Rayona at Aunt Ida's. Christine moves in with Dayton, and the two take up an existence as "an old married couple."
Meanwhile, Rayona decides that she hates living with her grandmother, Aunt Ida, and sets out for Seattle, but not before a Catholic priest on the reservation, Father Tom, sexually assaults her. Rayona takes refuge at Bearpaw Lake, a park where she works as a garbage maintenance worker. At Bearpaw Lake, she meets Evelyn and Sky, a married couple who take Rayona into their home and accept her for who she is, without asking any questions. But Evelyn and Sky eventually learn of Rayona's past and about her strained relationship with her mother. To their credit, they drive Rayona to a rodeo being held close to the Montana reservation where Ida and now Christine live. At the rodeo, Rayona steels herself and rides a bucking bronco, which Dayton owns.
Following the rodeo, Rayona says goodbye to Evelyn and Sky and goes home with Dayton, where she again confronts her mother, Christine. Rayona and Christine eventually gain a better understanding of each other than they've ever had before, symbolized by Christine's giving Rayona one of her favorite rings. Also, although not stated explicitly by Dorris, Christine and Aunt Ida also gain a better understanding of each other.