There is disclosed a method of manufacturing a plugged honeycomb structure, capable of simply manufacturing a plugged honeycomb structure which can avoid a phenomenon of rapid increase of pressure losses generated by cell openings clogged with particulate matters on an inlet side. The method of manufacturing the plugged honeycomb structure in the present invention includes the steps of: forming a clay into a honeycomb shape to obtain a cylindrical honeycomb formed body having a plurality of partitioned cells; preparing a plugging material so that a contraction ratio (firing contraction ratio) of the plugging material during the firing is a predetermined ratio with respect to the firing contraction ratio of the honeycomb formed body; plugging openings of predetermined cells on one end side of each cell with the plugging material to obtain a plugged honeycomb formed body; and firing this plugged honeycomb formed body in a state in which the plugged honeycomb formed body is laid on a firing setter so as to bring each end plugged with the plugging material into contact with the firing setter to obtain the plugged honeycomb structure.