The House on the Lagoon is the story of Quintin Mendizabal and his wife, Isabel Monfort. Isabel, a fledgling novelist, is writing a multigenerational novel about the history of their families, of Spanish and Corsican origins, and their arrival in Puerto Rico. Her ambition is great, but her sense of history comically weak. When Quintin, who happens to be a historian, finds her manuscript, he begins to write alternate chapters expressing his own point of view.

Isabel colorfully weaves a tapestry of life among the ruling classes of Puerto Rico, with their passionate debates about independence, statehood, racism; their links to Spain and Europe; and their ambivalence toward the United States. But as she draws a self-portrait of her marriage as well, it becomes clear that her relationship with her husband is far from picture-perfect. Quintin becomes incensed at Isabel's version of events, at her audacity in writing a book, and an autobiographical one at that.

And Isabel, in her struggle to forge a new identity and free herself from her coercive marriage and the constraints of the culture, precipitates a conflagration that threatens to consume the entire family.