At the age of nine, Chiyo Sakamoto is taken from her poverty-stricken fishing village of Yoroido on the coast of the Sea of Japan with her older sister Satsu and sold to an okiya (geisha boarding house) in Gion, the most prominent geisha district in Kyoto. Perceived as less attractive in looks and demeanor, Satsu is not sold into the okiya and is instead forced into becoming a prostitute in Kyoto's pleasure district. Chiyo lives in the okiya alongside another young girl named Pumpkin, the elderly and grumbling Granny, money-obsessed Mother, and Auntie, a failed geisha. Also living in the okiya is the famous and ill-mannered geisha, Hatsumomo. She promptly takes to disliking Chiyo, whom she sees as a potential future rival who may threaten her place in the okiya and Gion, as well as Mother's financial dependence upon her earnings. Hatsumomo begins to go out of her way to get rid of Chiyo.
One rainy night after returning to the okiya, Chiyo happens upon Hatsumomo engaged in intimate relations with her plebeian boyfriend, Koichi, a livelihood-threatening situation for a geisha, whose air of unattainability is crucial to their allure. The startled and enraged Hatsumomo twists the situation to place blame for a fictional indiscretion on Chiyo. Eventually, Mother learns the truth from Chiyo and though she is punished, Hatsumomo is also banned from seeing Koichi again, increasing her hatred for Chiyo. Despite Pumpkin and Auntie's warning not to run away, Chiyo plans to leave the okiya and escape the city with Satsu, but is caught when she falls off the roof and breaks her arm. Enraged at her for dishonoring the okiya and incurring further medical costs, Mother stops investing in Chiyo and makes her pay off her increasing debts as a slave, rather than a geisha in training.
Several years later, a downtrodden Chiyo is given money and a handkerchief in the street by a strange but kind man known at this point only as the Chairman. She donates the money to the Yasaka shrine in Gion, praying to become a geisha in the hopes of entering an exclusive social sphere where she may have a chance of seeing him again, keeping the handkerchief as a memento. Chiyo is somewhat envious of Pumpkin, who is on her way to becoming a geisha under Hatsumomo's tutelage, while Chiyo still remains a maid under Mother. Pumpkin advances and is given her geisha name as Hatsumiyo but much to Hatsumomo's dismay, everyone still refers to her as Pumpkin.
In a startling turn of events for Chiyo, not long after visiting the shrine and during Granny's funeral, she is taken in as a protégé by Mameha, a rival of Hatsumomo and the owner of a kimono Hatsumomo previously forced Chiyo to ruin. Mameha persuades Mother to reinvest into Chiyo's training. Chiyo adopts the name of Sayuri for her geisha name, with Mameha acting as her "older sister" and mentor. Mameha mentions that despite Hatsumomo's popularity, she was in fact a failure due to once angering the mistress of her principal tea house. As a result, she could never obtain a danna to sponsor her independence and she has stayed in the okiya under Mother. It was also revealed that despite her financial contributions, Mother had refused to name Hatsumomo as the heiress of the okiya because she was afraid of the trouble she would bring if named. Everyone believes Hatsumomo would likely throw Mother out, sell off the okiya's kimono collection, retire and live on the money.
Hatsumomo continues to go out of her way to ruin Sayuri by tarnishing her reputation in Gion, forcing Mameha and Sayuri to devise a plan to push Hatsumomo out of the Nitta okiya lest Sayuri's career ultimately die. They arrange for Sayuri's mizuage (portrayed as a deflowering "ceremony" for maiko as a step to becoming full-fledged geisha) to be bidden upon by several influential men, namely mentor Toshikazu Nobu, the president of Iwamura Electric as well as a close friend Ken Iwamura, who is revealed to be the Chairman; and reputed mizuage specialist "Dr. Crab", dubbed so by Sayuri due to his appearance. Unfortunately, Hatsumomo learns of the plan and tells Dr. Crab that Sayuri has already been deflowered. However, after gaining back the respect of Dr. Crab by convincing him that Hatsumomo is a known liar, he ultimately wins the bid for Sayuri's mizuage and she uses his record-breaking payment to cover all of her fees. This leads Mother, who had been poised to adopt Pumpkin as her heiress, to choose Sayuri instead, ultimately destroying the two girls' friendship. This turn of events enrages both Pumpkin and Hatsumomo for different reasons: Pumpkin was looking forward to the adoption so that she could have some form of security in her old age. Hatsumomo was eagerly anticipating to Pumpkin's adoption so she could secure her own position as head geisha and drive the up-and-coming Sayuri out of Gion. Hatsumomo's behavior begins to worsen past all excuse and she is eventually thrown out of the okiya, with Pumpkin leaving soon after.
Eventually it is revealed Dr. Crab was actually bidding against the Baron, Mameha's danna, for Sayuri's mizuage. The Baron had previously tried to sexually assault Sayuri, undressing her against her will at a party, which Mameha had warned against. Nobu instead bids to become Sayuri's danna, but loses out to General Tottori. At this time, Japan is on the brink of entering World War II and many Geisha are evacuated to other cities to work in factories, which require hard labor and are primary bomb targets. The General is demoted and is unable to use any influence to send Sayuri somewhere safer but Nobu, despite losing respect for Sayuri, is able to send her far north to live with Arashino, a kimono maker. At the end of the war, Nobu visits Sayuri and asks that she return to Gion to help entertain the new Deputy Minister Sato, whose aid can be instrumental in rebuilding Iwamura Electric, the company which the Chairman and Nobu run. Once returning to Gion, Sayuri helps Mother and Auntie clean up the okiya and shows kindness to the new girl they taken in to train under her. She also seeks the help of a homeless Pumpkin who is unhappy to see her again, but eventually agrees to help her entertain the Minister.
Sayuri, Mameha and Pumpkin entertain the Minister together regularly and within time, Nobu formally begins proposals to become Sayuri's danna. Sayuri still maintains strong feelings for the Chairman and doesn't want Nobu to become her danna, so on a weekend trip to the Amami Islands with Iwamura Electric, she plans to seduce the Minister and be caught in humiliation by Nobu. Mameha warns against her plans because it would disrespect him and tells her to accept him as her danna. Sayuri refuses and asks Pumpkin for one last favor to bring Nobu to a theater while she is with the Minister. Pumpkin agrees, but she still harbors resentment towards Sayuri for being adopted by Mother. Upon noticing her feelings towards the Chairman, Pumpkin purposely brings him to the theater instead. Sayuri is upset with her for betraying her because she wanted Nobu there to catch her with the Minister and confronts her for it. An enraged Pumpkin coldly tells Sayuri that she got what she deserved because she stole away her chances to be adopted by Mother, forcing her to be a prostitute in order to survive. She even mentions that she went out of her own way to help Sayuri in the past by making herself look bad in order to embarrass Hatsumomo. Pumpkin revealed that she intentionally brought the Chairman to catch Sayuri seducing the Minister so he will be disgusted by her behavior and she will be forced to accept Nobu as her danna.
Sayuri eventually meets the Chairman again and reveals that her acts in Amami were for personal reasons. He reveals to Sayuri that he had always had feelings towards her, despite her thinking he didn't, but explains that he felt it disrespectful to take away the woman his friend had showed so much interest in, especially considering Nobu had once saved the Chairman's company. He also reveals that he found out the truth after confronting Pumpkin and told Nobu afterwards, causing Nobu to cease becoming Sayuri's danna. Sayuri and the Chairman kiss, which she feels is her first kiss expressing true love.
Sayuri eventually retires from being a geisha and the Chairman becomes her danna. It is revealed that they have an illegitimate son together. Foreseeing the consequences this could have regarding the inheritance of Iwamura Electric, she relocates to New York City in later life. Here she opens her own small tea house for entertaining Japanese men on business in the United States, in which Mother takes a financial interest, but Sayuri severs her links to the Nitta okiya and in effect, Japan. The Chairman remains her danna until his death and the story concludes with a reflection on Sayuri/Chiyo and her life.