When a twelve-year-old student, Tommy Frazer moves to a new town and goes to a new school, he decides to help decorate for the upcoming school dance. Thalia Halpert-Rodis, a beautiful, kind blonde-haired girl who always wears makeup (red lipstick) who is also working on the dance, requests red paint and Tommy offers to get it for her. Along the way he hears a voice, but nobody is there.
He meets a tall girl with eerie, gray eyes named Greta while on his way back to the gym. He also gets lost and stumbles across a room marked "The Class of 1947." Inside are statues of twenty-five children; the principal appears and explains that these statues are in memory of the twenty-five children of 1947 who mysteriously disappeared via CRACK after getting their class picture taken.
On the night of the dance, Tommy and his friend Ben Jackson need to fix a banner. While searching for needed materials, they find an elevator that goes sideways and transports them to a classroom in Grayworld, a place where everything is in grayscale (black and white). Here they meet Seth Cortez and his friends, Eddie, Mona, Eloise, and Mary who became a few of the members of the Missing Class of 1947 who have not aged even after all that time. Seth tells them the story of how a photographer named Mr. Chameleon sent them to this colorless world in a "CRACK" with his camera, during the class photo. Everyone transported to this world gradually loses their color.
Tommy and Ben decide to investigate the world outside of the school, although Seth warns that his remaining classmates had gone crazy years ago and now roam the outside land as savages. Seth and his friends remain in the school, because it is the only place they consider safe from their former friends.
Ben and Tommy leave through the classroom window into the city outside. There, they get attacked by the other members of the class of 1947, who perform strange rituals involving a pool of steaming black goo. Angry that Tommy and Ben still have color, they want to turn them into "one of them" by dumping them into the goo pool. Seth and his friends save Tommy and Ben at the last minute and return to the classroom. As Tommy and Ben try to figure out how to escape, Seth informs them that only one girl (You'll know WHO in Chapter 28) has ever escaped and no one knows how. Tommy thinks that it must have been Greta, the girl with the gray eyes he saw at school. Tommy remembers the lighter his grandfather gave him and tries to use it to somehow escape, but the flame is now colorless as well. Suddenly the elevator opens and Thalia appears, surprising everyone. Seth and the others are excited to see her and already know her name. It turns out Thalia is the aforementioned girl who managed to escape the gray world.
Thalia explained to her friends how she opened her tube of lipstick one day and got excited after discovering that it still had color. She hadn't seen color in so long, she tried to draw on the wall to make colorful pictures. But when her lipstick touched the wall, it made an exit into the real world. Thalia immediately went through it without thinking and the hole instantly closed, before she could go back for the others. She had tried to make another hole but the lipstick was only ordinary in the real world.
Though she was back in the real world, Thalia also discovered she was still without color, and she hid this condition by constantly putting on makeup (and covering her gray eyes with blue contact lenses). Not knowing what else to do, she had stayed around the school looking for a way back into Greyworld to save her friends.
Now, after being in the real world for a while, she decides that both she and her friends are better off in Grey World. Using her lipstick, she opens a doorway for Tommy and Ben to escape while she and her friends stay behind.
Tommy and Ben flee and return to the gymnasium. When Tommy and Ben come back, they see their classmates to be standing in a settled position, they run and join them, and the principal says, "Yes Mr. Chameleon, you can click their class photo." Suddenly Tommy thinks,"Mr. Chameleon.... "NO! WAIT!" Tommy shouts, but no one listens, and Mr. Chameleon clicks the botton of the camera. There's a chance that they're not the missing Class of 1997 fifty years later, because CRACK sent the 47'ers to Grayworld and FLASH? Well, it might keep them in Colorworld.
- Despite the title, there are no ghosts in this book.
- This book was never made into a television episode for the Goosebumps television series.