The First Tale of Setne survives in Cairo CG 30646, a Demotic manuscript from the Ptolemaic Period. Demotic was a later Egyptian script and language stage, not the final form in which Egyptian was ever written. The tale looks back to an imagined royal past and places one story inside another: the spirit of Ahwere tells Setne how her family acquired Thoth's book. Setne himself is a literary transformation of Khaemwaset, a son of Ramesses II. The dates of those historical people cannot simply be imposed on every character in the fiction, particularly on the earlier family whose misfortune the ghost recounts.

Ahwere and Naneferkaptah are the children of Pharaoh Mernebptah. Their father initially prefers that each marry into a different household, but ultimately permits them to marry one another. Their son Merib is born into a family enjoying royal favour. Naneferkaptah's consuming interest is writing: he studies inscriptions in the necropolis and sacred texts. During a procession of Ptah, an elderly priest tells him that a far greater book exists, written by Thoth himself. Its two spells offer understanding of living creatures and a vision of the divine world. The priest gives its whereabouts in exchange for provisions for his own burial.

The book lies in the waters near Coptos, enclosed in a series of nested containers and surrounded by dangerous creatures. Ahwere opposes the journey, but Naneferkaptah obtains a royal ship from his father and takes his wife and son south. At Coptos the family is welcomed by the priests of Isis. Naneferkaptah then uses magic to animate a model boat and its crew and reach the hiding place. He opens a passage through the water, restrains the surrounding reptiles with spells and confronts the guardian serpent. Each time he kills it, it returns to life. He finally divides its body and separates the pieces with sand, preventing its return.

Naneferkaptah opens the boxes, working inward through metal and wooden containers until he reaches the gold box holding the book. He recites its spells and receives the promised powers. On returning to Ahwere, he lets her read it as well. He also copies its words onto papyrus, dissolves the writing in liquid and drinks it, taking the knowledge into himself. This is the apparent triumph of the expedition: the hidden object has been recovered and its secrets learned. But the owner of the book is a god, and the tale does not let the successful theft become the end of the adventure.

Thoth brings his complaint before Ra, who gives him power over the prince and his household. On the voyage north, Merib falls into the Nile and drowns. Naneferkaptah retrieves his body by magic, learns what has happened and has him buried at Coptos. When the journey resumes, Ahwere drowns at the same place. Her body is recovered and buried beside their son. Naneferkaptah then binds the book to his own body and also drowns. Each renewed attempt at the journey brings another loss. His body returns with the royal ship to Memphis, where his father mourns and arranges his burial. Ahwere and Merib remain at Coptos.

Within the later frame story, Setne hears Ahwere's warning but still demands the book. It is now Naneferkaptah, rising in his tomb, who challenges Setne to a board game. The dead prince wins repeatedly and uses magic to drive his opponent progressively deeper into the ground. Setne escapes through help brought from above, including protective objects associated with Ptah, then takes the book despite his defeat. The contest is fought through play, spells and the help each participant can command. The episode reverses Naneferkaptah's earlier role: the man who seized the book now protects it from someone driven by the same desire.

Setne's possession of the book brings a frightening encounter with Tabubu, in which he appears willing to surrender his property and children to satisfy his desire. When the experience breaks, his children are alive, but his confidence is gone. He returns the book in the humiliating manner Naneferkaptah had foretold. The dead prince then asks for something more valuable than victory: the bodies of Ahwere and Merib are to be brought from Coptos and buried beside him. Setne travels south, receives supernatural help in finding their grave and reunites the family. Their restored burial closes the tale's pattern of taking and returning. The book is back in the tomb, while the surviving seeker has learned that knowledge does not cancel responsibility.