The story opens on the lawn of an English country house by the Thames, where the American banker Daniel Touchett, his ailing son Ralph, and their neighbor Lord Warburton take afternoon tea. Into this settled world arrives Isabel Archer, a poor but clever young American brought over by her aunt, Mrs. Touchett. Isabel is curious, proud, and full of theories about how she means to live. She wants above all to see the world and to make her own decisions before she ties herself to anyone.
Suitors gather quickly. Lord Warburton, rich and kind, proposes and is refused. Caspar Goodwood, a forceful American who has followed her across the ocean, is held off as well. Isabel will not begin life by marrying. Her cousin Ralph, who loves her quietly and cannot court her because he is dying, persuades his father to leave her half of his own inheritance, so that she can meet life on her own terms. The fortune is given out of pure goodwill, with the wish, as Ralph puts it, to put a little wind in her sails.
In Italy Isabel falls under the influence of Madame Merle, an accomplished, worldly woman who seems the model of cultivated ease. Madame Merle introduces her to Gilbert Osmond, a refined American expatriate who lives for taste and appearances and has a young daughter, Pansy. Osmond presents himself as a poor, proud, undervalued man, and Isabel, against the warnings of Ralph and others, decides that giving herself and her money to such a man is a fine use of her freedom. She marries him.
The marriage curdles. Osmond wanted a wife who would mirror his own opinions, and Isabel, being herself, cannot. In the book's long central vigil she sits up alone by the fire and faces what her life has become: the wide prospect she imagined has narrowed into a dark, blind alley. She gradually grasps that Osmond married her for her fortune and that Madame Merle engineered the whole match. The deepest blow comes with the discovery that Pansy is the secret child of Osmond and Madame Merle, which means Isabel was chosen and managed from the start.
Word reaches her that Ralph is dying in England, and Osmond forbids her to go. She defies him and goes anyway, sitting with Ralph as he dies and learning that he had always understood the trap. Caspar Goodwood finds her once more and begs her to leave Osmond and be free with him. For a moment the appeal nearly overwhelms her, but she pulls away. The novel ends with Isabel having decided to return to Rome and to Pansy, choosing to stand by the consequences of a choice she made freely, while Goodwood is left with what Henrietta calls the key to patience.