The novel is set in the American South in the 1930s, during the time of Prohibition and Jim Crow laws that legalized racial segregation in the South. It begins with the journey of Lena Grove, a young pregnant white woman from Doane's Mill, Alabama, who is trying to find Lucas Burch, the father of her unborn child. He has been fired from his job at Doane's Mill and moved to Mississippi, promising to send word to her when he has a new job. Not hearing from Burch and harassed by her older brother for her illegitimate pregnancy, Lena walks and hitchhikes to Jefferson, Mississippi, a town in Faulkner's fictional Yoknapatawpha County. There she expects to find Lucas working at another planing mill, ready to marry her. Those who help her along her four-week trek are skeptical that Lucas Burch will be found, or that he will keep his promise when she catches up with him. When she arrives in Jefferson, Lucas is there, but he has changed his name to Joe Brown. Looking for Lucas, Lena meets Byron Bunch, who falls in love with Lena but attempts to aid her in finding Joe Brown. Byron is a puritanical workaholic who fears idleness as a snare of the devil, while Joe Brown is deceiving and lazy.
The novel then switches to the second plot strand, the story of Lucas Burch/Joe Brown's partner Joe Christmas. Christmas is an orphan who ran away from his adoptive family after getting into an argument with and killing his strict Methodist adopted father. Although he has light skin, Christmas suspects that he is of African American ancestry and wanders between black and white society, constantly struggling with his identity. Christmas comes to Jefferson three years prior to the central events of the novel and gets a job at the mill where Byron, and later Joe Brown, works. The job at the mill is a cover for Christmas's bootlegging operation, which is illegal under Prohibition. He has a sexual relationship with Joanna Burden, an older woman who descended from a formerly powerful abolitionist family whom the town despises as carpetbaggers. Though their relationship is passionate at first, Joanna begins menopause and turns to religion, which frustrates and angers Christmas. At the end of her relationship with Christmas, Joanna tries to force him, at gunpoint, to kneel and pray. Joanna is murdered soon after: her throat is slit and she is nearly decapitated.
The novel leaves readers uncertain whether Joe Christmas or Joe Brown is the murderer. Brown is Christmas' business partner in bootlegging and is leaving Joanna's burning house when a passing farmer stops to investigate and pull Joanna's body from the fire. The sheriff at first suspects Joe Brown, but initiates a manhunt for Christmas after Brown claims that Christmas is black. The manhunt is fruitless until Christmas arrives undisguised in Mottstown, a neighboring town; he is on his way back to Jefferson, no longer running. In Mottstown, he is arrested and jailed, then moved to Jefferson. His grandparents arrive in town and visit Gail Hightower, the disgraced former minister of the town and friend of Byron Bunch. Bunch tries to convince Hightower to give the imprisoned Joe Christmas an alibi, but Hightower initially refuses. Though his grandfather wants Christmas lynched, his grandmother visits him in the Jefferson jail and advises him to seek help from Hightower. As police escort him to the local court, Christmas breaks free and runs to Hightower's house. A zealous national guardsman, Percy Grimm, follows him there and, over Hightower's protest, shoots and castrates Christmas. Hightower is then depicted sitting alone at his home, musing over his past, including his obsession with the past adventures of his Confederate grandfather, who was killed while stealing chickens from a farmer's shed.
Before Christmas' escape attempt, Hightower delivers Lena's child in the cabin where Brown and Christmas had been staying before the murder, and Byron arranges for Brown/Burch to come and see her. However, when Brown gets there, he runs again, and Byron follows him, instigating a fight that he loses. Brown gets into a moving train and is not seen again. At the end of the story, an anonymous man is talking to his wife about two strangers he picked up on a trip to Tennessee, recounting that the woman had a child and the man was not the father. This was Lena and Byron, who were conducting a half-hearted search for Brown, and they are eventually dropped off in Tennessee.