The story follows Steve and Joe through their childhood. After school, the two of them go stay at a magical house, where everything is alive and joyful. Joe has no friends at school. None of the other kids understand him, least of all his brother. Joe doesn't care; he has friends at the Blue's Clues house.
At seven years old, Joe starts feeling lonely. He and mailbox have aged normally, but the rest of their friends have stayed young. Soon he's cut off from the magic house and those within it. Without a friend in the world, Joe wants to rely on Steve for support, but is jealous of the attention he gives Blue. Joe isolates himself, growing distant as the years pass.
Believing in Magic provides examples of:
- Age-Appropriate Angst: Steve leaving home is the last straw for 11-year-old Joe, partly because Steve said he'd always be there for him.
- Big Brother Instinct: When Joe is in second grade, Steve feels responsible to protect him from bullies.
- Deconstruction: Of the Blue's Clues arc that introduced Joe.
- In-Joke: Joe's coach addresses him as "Burns". Steve's actor in the original Blue's Clues was Steven Burns.
- Manchild: Steve grows to be one while living in the Blue's Clues house.
- Security Blanket: Boris, Joe's toy duck from Blue's Clues is shown to have been this.
- Switching P.O.V.: The first chapter follows major events in Joe's childhood, the second chapter Steve's. The third follows both of them.