Aunt Marge comes to visit the Dursleys.  She nags and harps on Harry who, provoked to anger, accidentally inflates her like a balloon.  He gets his trunk and things together and leaves Privet Drive.  After he's left he realizes that he did not get his permission slip signed to visit Hogsmeade, which all third year students get to do.  Harry wonders what to do when a bus arrives to take him to London, it is called the Knight Bus.  On the way to London Harry learns about Sirius Black, an escapee from Azkaban Prison.  He meets Cornelius Fudge, the Minister of Magic in Diagon Alley.  He gets a room at the Leaky Cauldron and plans on staying there until he must leave on the Hogwart's Express.  Harry buys his school supplies and eventually is reacquainted with Ron and Hermione.  Hermione gets a car named Crookshanks which goes after Scabbers, Ron's rat.  Harry goes with Ron back to his house, the Burrow, where he overhears Arthur and Mrs Weasley talking about the danger he is in with Sirius Black on the loose.

On the Hogwart's Express, the train is boarded by dementors who act as guards from Azkaban Prison.  Harry passes out when they get near him.  Once they get to school they learn that Hagrid has become the new Care of Magical Creatures teacher.  He show the class hippogriffs on of them, named Buckbeak, scratches Draco Malfoy.  Draco plays up his injury.  Lupin teaches the first Defense Against the Dark Arts class on confronting Boggarts, creatures that show you what you are most afraid of.

The fat lady portrait that guards the entrance to the Gryffindor tower is slashed and the students have to go to the Great Hall to spend the night.  Professor Lupin become sick and Professor Snape fills in for him in Defense Against the Dark Arts.  At a Quidditch match between Gryffindor and Hufflepuff Harry sees some dementors and passes out once again.  He wakes up in the hospital and finds out that they have lost the match.  After spending the weekend in the hospital, Professor Lupin returns to class.  He helps Harry with the dementors.  When Fred and George Weasley find out that Harry want to sneak out to Hogsmeade, they give him a map called the Marauder's Map which shows the school and the location of everyone inside the school.  He finds a secret passage use uses the invisibilty cloak to go to Hogsmeade.  Here he overhears a conversation and learns that Sirius Black is supposed to have given Harry's parents over the Voldemort.  He also learns that Sirius is his godfather.

Harry, Ron and Hermione go to visit Hagrid.  He is upset about Buckbeak's hearing.  It has been set up with the Committee for the Disposal of Dangerous Creatures since Draco's injury.  For Christmas Harry gets a Firebolt broom.  There is no name on the gift and, when Professor McGonagall finds out about it, she takes the Firebolt to check it for jinxes.  Harry and Ron both get angry at Hermione when she lets them know she reported the broom to Professor McGonagall.  Professor Lupin teaches Harry the Patronus so that he can use it against the dementors if they should show up again.  Harry finally get his broom back.

Gryffindor plays Ravenclaw in Quidditch and wins.  Several Slytherin students, Draco among them,  try to disrupt the game by dressing as dementors.  Harry disperses them with a Patronus though.  Security is tightened due to repeated incursions into the school by Sirius Black.  Hagrid has to go to London with Buckbeak and Ron and Harry visit Hogsmeade again wearing the invisibility cloak.  They meet up with Draco and play a trick on him, Crabbe and Goyle.  Harry is found out and is stopped by Professor Snape who begins to question him until stopped by Professor Lupin.  Hagrid looses the case against Buckbeak and the hippogriff is sentenced to be put to death.  Gryffindor plays Slytherin in a Quidditch match and wins.

Final examinations are finally here and Buckbeak's appeal is scheduled.  Professor Trelawney, though normally not a psychic, predicts that Voldemort will return.  Ron, Hermione and Harry visit Hagrid when the see the Ministry workers show up to take Buckbeak.  The go back to the castle but Hermione's cat, Crookshanks, chases Scabbers, Ron's rat.  A big black dog drags Ron away and into the Whomping Willow.  Harry and Hermione follow them into a tunnel under the willow.  The tunnel leads to the Shrieking Shack just outside of Hogsmeade.  Ron has been taken captive by Sirius Black.  Harry, Ron and Hermione overpower Sirius but Crookshanks breaks up the scuffle.  Harry threatens to kill him but Professor Lupin shows up and admits that he is a friend of Sirius Black and that he is also werewolf.  He also tells them that Scabbers is an animagus named Peter Pettigrew.  Pettigrew was supposed to have been killed when Sirius did the deed that he was imprisoned for.  Professor Lupin tells about his becoming a werewolf and about Harry's father James Potter, Sirius Black and Professor Snape.  He had gone to school with them all.  Professor Snape shows up in the shrieking shack after the tale is told and threatens Professor Lupin and Sirius Black with the dementors.  Professor Snape is disarmed  and Professor Lupin and Sirius Black tell the truth about James and Lily Potter's deaths.  Scabbers, the rat, turns into Peter Pettigrew and then the truth about how Sirius Black was framed comes out.  Peter was actually responsible for the Potter's deaths and for the mass murder that caused Sirius Black to go to prison.  Harry stops Professor Lupin and Sirius Black from killing Pettigrew.  They all go back to the castle and Sirius Black invites Harry to live with him, since he is his godfather.  Professor Lupin becomes a wolf and Sirius Black has to become a dog prevent him from attacking Harry, Ron and Hermione in his frenzy.  Peter Pettigrew becomes a rat again and runs off but Sirius Black goes after him.  He is met by dementors.  Harry and Hermione are also caught when they run for help.

Harry wakes up in the hospital.  Hermione has been using a Time-Turner, which Professor Dumbledore had given her and made to keep secret, to attend more classes than she could normally have done.  Professor Dumbledore arrives in the hospital and tells Hermione to use the Time-Turner to go back and save Buckbeak and Sirius Black.  They rescue Buckbeak from the Ministry and then they rescue Harry himself from the dementor.  They then they ride Buckbeak to rescue Sirius Black.  He escapes on the Buckbeak.  Harry and Hermione return to their house and Professor Snape blames them for Sirius Black's escape.  He cannot prove it however.  Professor Lupin resigns since there is a problem with many of the parents with a werewolf teaching at Hogwarts.  He returns Harry's invisibility cloak and Marauder's Map.

When they gat to the station after school is out, Harry gets a letter from his godfather, Sirius.

It took Harry several days to get used to his strange new freedom.  Never before had he been able to get up whenever he wanted or eat whatever he fancied.  He could even go wherever he pleased, as long as it was in Diagon Alley, and as this long cobbled street was packed with the most fascinating wizarding shops in the world, Harry felt no desire to break his word to Fudge and stray back into the Muggle world.

Harry ate breakfast each morning in the Leaky Cauldron, where he liked watching the other guests: funny little witches from the country, up for a day's shopping; venerable-looking wizards arguing over the latest article in Transfiguration Today; wild-looking warlocks; raucous dwarfs; and once, what looked suspiciously like a hag, who ordered a plate of raw liver from behind a thick woollen balaclava.

After breakfast Harry would go out into the backyard, take out his wand, tap the third brick from the left above the trash bin and stand back as the archway into Diagon Alley opened in the wall.

Harry spent the long sunny days exporing the shops and eating under the brightly colored umbrellas outside cafes, where his fellow diners were showing one another their purchases ("it's a lunascope, old boy - no more messing around with moon charts, see?") or else discussing the case of Sirius Black ("personally, I won't let any of the children out alone until he's back in Azkaban").  Harry didn't have to do his homework under the blankets by flashlight anymore; now he could sit in the bright sunshine outside Florean Fortescue's Ice Cream Parlor, finishing all his essays with occasional help from Florean Fortescue himself, who, apart from knowing a great deal about medieval witch burnings, gave Harry free sundaes every half an hour.

Once Harry had refilled his money bag with gold Galleons, silver Sickles, and bronze Knuts from his vault at Gringotts, he had to exercise a lot of self-control not to spend the whole lot at once.  He had to keep reminding himself that he had five years to go at Hogwarts, and how it would feel to ask the Dursleys for money for spellbooks, to stop himself from buying a handsome set of solid gold Gobstones (a wizarding game rather like marbles, in which the stones squirt a nasty-smelling liquid into the other player's face when they lose a point).  He was sorely tempted, too, by the perfect, moving model of the galaxy in a large glass ball, which would have meant he never had to take another Astronomy lesson.  But the thing that tested Harry's resolution most appeared in his favorite shop, Quality Quidditch Supplies, a week after he'd arrived at the Leaky Cauldron.