Lily tells the story of a foundling left in 1850 at the London Foundling Hospital. The baby is saved from wolves by a young police officer, Sam Trench.

Named Lily Mortimer for a Foundling Hospital benefactor, the baby is then taken to a family at Rookery Farm in Suffolk where she is well cared for by her foster parents and foster siblings and the small child contributes as best she can to the work of the farm. Foster mother, Nellie Buck, is delighted to have a girl and teaches her needlework, a useful skill that the protagonist, 16-year-old and independent Lily, employs in her job as a wig maker at Belle Prettywood’s Wig Emporium. When she is returned to the Foundling Hospital at the age of 6, Lily misses her foster family greatly and arranges with a young friend, Bridget—both girls are now 7 years of age—to run away.