Esther Waters is born to hard-working parents who are Plymouth Brethren in Barnstaple. Her father's premature death prompts her mother to move to London and marry again, but Esther's stepfather turns out to be a hard-drinking bully and wife-beater who forces Esther, a natural beauty, to leave school and go out to work instead, thus greatly reducing her chances of ever learning how to read and write, and Esther remains illiterate all her life.
Her first job ("situation") outside London is that of a kitchen maid with the Barfields, a nouveau riche family of horse breeders, horse racers and horse betters who live at Woodview near Shoreham. There she meets William Latch, a footman, and lets herself be seduced by him. Dreaming of a future with Latch, she is dismayed to find that he is having an affair with the Barfields' niece, who is staying at Woodview. After Latch and his lover have eloped together, Esther stays on at Woodview until she cannot hide her pregnancy any longer. Although she has found a kindred soul in Mrs Barfield, who is also a Plymouth Sister and abhors the betting on horses going on all around her, Esther is dismissed ("I couldn't have kept you on, on account of the bad example to the younger servants") and reluctantly goes back to London.
With the little money she has saved, she can stay in a rented room out of her stepfather's sight. Her mother is pregnant with her eighth child and dies giving birth to it at the same time Esther is at Queen Charlotte's Hospital giving birth to a healthy boy she calls Jack. Still in confinement, she is visited by her oldest sister who asks her for money for her passage to Australia, where her whole family have decided to emigrate. Esther never hears of them again.
Learning that a young mother in her situation can make good money by becoming a wet nurse, Esther leaves her newborn son in the care of a baby farmer and nurses the weakly child of a wealthy woman ("Rich folk don't suckle their own") who, out of fear of infection, forbids Esther any contact with Jack. When, after two long weeks, she finally sees her son again, realises that he is anything but prospering and even believes that his life might be in danger, she immediately takes him with her, terminates her employment without notice and then sees no other way than to "accept the shelter of the workhouse" for herself and Jack.
But Esther is lucky, and after only a few months can leave the workhouse again. She chances upon Mrs Lewis, a lonely widow living in East Dulwich who is both willing and able to raise her boy in her stead, while she herself goes into service again. However, she is not able to really settle down anywhere: either the work is so hard and the hours so long that, fearing for her health, she quits again; or she is dismissed when her employers find out about the existence of her illegitimate son, concluding that she is a "loose" woman who must not work in a respectable household. Later on, while hiding her son's existence, she is fired when the son of the house, in his youthful fervour, makes passes at her and eventually writes her a love letter she cannot read.
Another stroke of luck in her otherwise dreary life is her employment as general servant in West Kensington with Miss Rice, a novelist who is very sympathetic to her problems ("Esther could not but perceive the contrast between her own troublous life and the contented privacy of this slender little spinster's"). While working there, she makes the acquaintance of Fred Parsons, a Plymouth Brother and political agitator, who proposes to Esther at about the same time she bumps into William Latch again while on an errand for her mistress. Latch, who has amassed a small fortune betting on horses and as a bookmaker ("I am worth to-day close on three thousand pounds"), is the proprietor of a licensed public house in Soho and has separated from his adulterous wife, waiting for his marriage to be divorced. He immediately declares his unceasing love for Esther and urges her to live with him and work behind the bar of his pub. Esther realises that she has arrived at a crossroads and that she must make up her mind between the sheltered, serene and religious life Parsons is offering her—which she is really longing for—and sharing the financially secure but turbulent existence of a successful small-time entrepreneur who, as she soon finds out, operates on both sides of the law. Eventually, for the sake of her son's future, she decides to go to Soho with Latch, and after his divorce has come through the couple get married.
A number of years of relative happiness follow. Jack, now in his teens, can be sent off to school, and Esther even has her own servant. But Latch is a gambler, and nothing can stop him from risking most of the money he has in the vague hope of gaining even more. Illegal betting is conducted in an upstairs private bar, but more and more also across the counter, until the police clamp down on his activities, his licence is revoked, and he has to pay a heavy fine. This coincides with Latch developing a chronic, sometimes bloody, cough, contracting pneumonia, and finally, in his mid-thirties, being diagnosed with tuberculosis ("consumption"). However, rather than not touching what little money he still has for his wife and son's sake, the dying man puts everything on one horse, loses, and dies a few days later.
With Miss Rice also dead, Esther has no place to turn to and again takes on any menial work she can get hold of. Then she remembers Mrs Barfield, contacts her and, when asked to come to Woodview as her servant, gladly accepts while Jack, now old enough to earn his own living, stays behind in London. When she arrives there, Esther finds the once proud estate in a state of absolute disrepair, with Mrs Barfield the only inhabitant. Mistress and maid develop an increasingly intimate relationship with each other and, for the first time in their lives, can practise their religion unhindered. Looking back on her "life of trouble and strife," Esther, now about 40, says she has been able to fulfil her task—to see her boy "settled in life," and thus does not see any reason whatsoever to want to get married again. In the final scene of the novel, Jack, who has become a soldier, visits the two women at Woodview.