Truth like a Fairytale is an allegory of America. It is set on the planet of An Terra, which is much larger than Earth, where a year is 900 days long. Most of the story takes place in the country of Merica. Merica was discovered (or rather blundered into) by a mariner named Cristobal di Caracteritzi as he searched for a sea route to the legendary Eastron city of Bangbuhm. It was zoned, rather than mapped, by a real estate agent named Merico Vestibuli. There are a number of quirks in Merican history because it was laid out by a man who was looking to make a profit from it - largely in the field of penal real estate.

The story itself is a political thriller in which two of the main characters, "kops" named Wilder McUrphy and Davitt Smyler, are wounded at the outset of the story by a villain "call-ed by some 'Colonel Badde'" as he first tested his "explosive product". The plot hinges on events which span the entire 300 year history of Merica, and has a great deal to do with tensions between one organization known as The Wild Boars (Granddaddies), and the Discus Anterum Society, who (despite over a thousand years of evidence to the contrary) believe that An Terra is a flat disc that has been tossed through space by a cosmic being named Ronson as he played with his cosmic dog named Phostar.