The Mad Ship continues where Ship of Magic left off and reveals some of the secrets that were hinted at in the first book.
Althea Vestrit is on her way home to Bingtown on board the Liveship Ophelia, where she has proven herself a good sailor and won the heart of Trader heir Grag Tenira. But she returns to the news that Vivacia and her crew have not been heard from for many months. The Vestrit family’s dire financial situation has led to the Khuprus family buying the deeds to Vivacia so that they can claim Malta as a bride for their son Reyn, who has fallen for her - a claim the Vestrits feel honour-bound to uphold under the ancient “blood payment” clause of their contract.
Wintrow, on board Vivacia, inadvertently creates a three-way bond between himself, Vivacia, and pirate king Kennit, when he uses his monastery-learned healing powers to prevent Kennit dying when his damaged leg is amputated.
Malta is still playing her two suitors, Reyn and Cerwin, against each other.
Brashen Trell, working on board a pirate ship himself (and still battling his drug addiction), spots Vivacia in the docks of a pirate town, flying Kennit’s flag. He sets off for Bingtown to take the awful news of Vivacia’s capture, and the likely slaughter of her crew, back to Althea and her family. Together with Amber, Althea and Brashen pool their resources to buy the Liveship Paragon (the "mad ship" of the title) and attempt to rescue Vivacia and whomever of her family and crew Kennit has kept alive.
Far away in Jamailia, Serilla, an adviser to the Satrap who has spent her life studying the histories and social structure of Bingtown, risks her life to travel out to see the fabled Rain Wild town for herself.
Reyn Khuprus faces a moral dilemma that will turn the lives of every Trader family upside down if ever revealed. His hand is forced by his love for Malta, but destiny has other ideas.
The purpose of the sea serpents in the books, and their status as viewpoint characters is also clarified.