It is the adult world that has driven him insane. He just cannot relate to anyone except for his kid sister Phoebe. Everything and all other people seem "phony" to him. Holden is unable to accept life. Since Holden is becoming an adult himself, he is unhappy with what he will represent. He flunks out of three boarding schools in a row, the latest of them Pencey Prep, which is also where the first part of the story takes place.
One Saturday night, after an unpleasant experience with his history teacher "Old Spencer," his roommate Stradlater and the boy next door, Robert Ackley, Holden decides to leave Pencey four days early for Christmas break. He knows that he cannot return to his parents because they are not aware that he has been expelled again. Holden spends the next three days wandering aimlessly around New York City. He stays at a cheap hotel for one night, goes to two night clubs, dances with older women, often talks and thinks about sex, even has a prostitute come up to his room.
The next day, he talks with some nuns about literature and has a date with his former girlfriend Sally Woodruff. They go to the theater and also go ice-skating. When he asks her to run away with him, she gets mad and they part. He is "depressed," at this time Holden thinks and even talks to his deceased brother Allie. To Holden, Allie represented innocence. With nobody else around, Holden turns to the only person he can relate to, his sister Phoebe. He sneaks into his parent's apartment at night to talk to his sister. He tells her about his dream to be a "catcher in the rye," and that he wants to run away.
He then leaves to meet his former teacher, Mr. Antolini. They have a good talk, but Holden leaves in a hurry when he thinks his host makes a sexual advance on him. He spends the night in a train station, then runs around town.
Finally, he meets his sister, who tells him she wants to run away with him and that she will never go back to school. Holden sees himself in her, finally changes his mind and decides to go back to his parents. We are able to conclude that Holden then is sent to a mental hospital for treatment.