Wealthy and leisured Roger Lawrence adopts twelve-year-old Nora Lambert after her father blows his brains out in the hotel room next to Lawrence's. Roger had refused financial assistance to the man, and he feels remorse. Nora is not a pretty child but she soon starts to develop, as does Roger's idea of eventually marrying her.
Unfortunately for Roger, once Nora matures into a beautiful young woman, she is attracted to two other men: worthless George Fenton and the somewhat hypocritical minister, Hubert Lawrence (Roger's cousin). After various adventures Nora winds up in the clutches of Fenton in New York, but Roger comes to her rescue. Roger and Nora marry in a conventional happy ending.
James' technique is primitive at such an early stage of his career. Nora's development into the beautiful swan from the ugly duckling is told rather than shown, and Fenton is a stock villain of the most routine kind. Still, hints of the master-to-be are apparent from the well-described scenes of New York low life and the charm that Nora eventually displays.
A humorous side note is some of the erotic language that James slips into the novel. At one point Roger "caught himself wondering whether, at the worst, a little precursory love-making would do any harm. The ground might be gently tickled to receive his own sowing; the petals of the young girl's nature, playfully forced apart, would leave the golden heart of the flower but the more accessible to his own vertical rays." William James and William Dean Howells were uncomfortable with such imagery, though Henry might have enjoyed their uneasiness.
James did revise Watch and Ward for book publication in 1878, so he wasn't completely ashamed of it at that point in his career. But he dropped the novel from his 1883 collective edition and soon seemed to want to forget about it completely.