The story begins seven years after the broken engagement of Anne Elliot to Frederick Wentworth: having just turned nineteen years old, Anne fell in love and had accepted a proposal of marriage from Wentworth, then a young and undistinguished naval officer. Wentworth was considered clever, confident and ambitious, but his low social status and lack of wealth made Anne's friends and family view him as an unsuitable partner. Anne's father, Sir Walter Elliot, and her older sister, Elizabeth, maintained that Wentworth was no match for a woman of Kellynch Hall, the family estate. Furthermore, Lady Russell, a distant relative whom Anne considers to be a second mother to her after her own died, also saw the relationship as imprudent for one so young and persuaded Anne to break off the engagement. Sir Walter, Elizabeth, and Lady Russell are the only family members who knew about the short engagement, as Anne's younger sister Mary was away at school.
An illustration by Hugh Thomson of a moment in chapter three, when Sir Walter regards Admiral Baldwin and asks Sir Basil Morley, "In the name of heaven, who is that old fellow?"Several years later, the Elliot family are in financial trouble on account of their lavish spending, so they decide to rent out Kellynch Hall and settle in a cheaper home in Bath until their finances improve. Sir Walter, Elizabeth, and Elizabeth's new companion, Mrs Clay, look forward to the move. Anne, on the other hand, doubts she will enjoy Bath, but cannot go against her family. Mary is now married to Charles Musgrove of Uppercross Hall, the heir to a respected local squire. Anne visits Mary and her family, where she is well-loved. As the Napoleonic Wars are over, Admiral Croft and his wife Sophia (Frederick's sister) have become the new tenants of Kellynch Hall. Captain Wentworth, now wealthy from his service in the war, visits his sister and meets the Uppercross family, where he crosses paths with Anne.
The Musgroves, including Mary, Charles, and Charles's sisters Henrietta and Louisa, welcome the Crofts and Captain Wentworth, who makes it known that he is ready to marry. Henrietta is engaged to her cousin, clergyman Charles Hayter, who is absent when Wentworth is introduced to their social circle. Both the Crofts and Musgroves enjoy speculating about which sister Captain Wentworth might marry. Once Hayter returns, Henrietta turns her affections to him again. Anne still loves Wentworth, so each meeting with him requires preparation for her own strong emotions. She overhears a conversation in which Louisa tells Wentworth that before marrying Mary, Charles Musgrove first proposed to Anne, who turned him down. This news startles Wentworth, and Anne realises that he has not yet forgiven her for letting herself be persuaded to end their engagement years ago.
Anne and the young adults of the Uppercross family accompany Captain Wentworth on a visit to see two of his fellow officers, Captains Harville and Benwick, in the coastal town of Lyme Regis. Captain Benwick is in mourning over the death of his fiancée, Captain Harville's sister Fanny, and he appreciates Anne's sympathy and understanding, helped by their mutual admiration for the Romantic poets. Anne attracts the attention of Mr William Elliot, her cousin and a wealthy widower who is heir to Kellynch Hall despite having broken ties with her father years earlier. On the last morning of the visit, Louisa sustains a serious concussion after jumping from the Cobb seawall expecting to be caught by Wentworth. Anne coolly organises the others to summon assistance. Wentworth is impressed with Anne's quick thinking and cool-headedness, but feels guilty about his actions encouraging Louisa's attraction to him. This causes him to re-examine his feelings for Anne. Louisa, due to her delicate condition, is forced to recover at the Harvilles' home in Lyme for months. Captain Benwick, who was a guest as well, helps in Louisa's recovery by attending and reading to her.
Following Louisa's accident, Anne joins her father and sister in Bath, with Lady Russell also in the city, while Louisa stays at the Harvilles' in Lyme Regis for her recovery. Captain Wentworth visits his older brother Edward in Shropshire. Anne finds that her father and sister are flattered by the attentions of their cousin William Elliot, thinking that if he marries Elizabeth, the family fortunes will be restored. William flatters Anne and offhandedly mentions that he was "fascinated" with the name of his future wife already being an "Elliot" who would rightfully take over for her late mother. Although Anne wants to like William, the attention and his manners, she finds his character opaque and difficult to judge.
Admiral Croft and his wife arrive in Bath with the news that Louisa is engaged to Captain Benwick. Wentworth travels to Bath, where his jealousy is piqued by seeing William trying to court Anne. Captain Wentworth and Anne renew their acquaintance. Anne visits Mrs Smith, an old school friend, who is now a widow living in Bath under straitened circumstances. From her, Anne discovers that beneath William's charming veneer, he is a cold, calculating opportunist who led Mrs Smith's late husband into debt. As executor to her husband's will, William has done nothing to improve Mrs Smith's situation. Although Mrs Smith believes that William is genuinely attracted to Anne, she feels that his primary aim is to prevent Mrs Clay from marrying Sir Walter, as a new marriage might mean a son for Sir Walter, displacing William as heir to Kellynch Hall.
The Musgroves visit Bath to purchase wedding clothes for Louisa and Henrietta, both soon to marry. Captains Wentworth and Harville encounter them and Anne at the Musgroves' hotel in Bath, where Wentworth overhears Anne and Harville discussing the relative faithfulness of men and women in love. Deeply moved by what Anne says about women not giving up their feelings of love even when all hope is lost, Wentworth writes her a note declaring his feelings for her. Outside the hotel, Anne and Wentworth reconcile, affirm their love for each other, and renew their engagement. Lady Russell admits she was wrong about Wentworth and endorses the engagement. William leaves Bath; Mrs Clay soon follows him and becomes his mistress, making it more likely that he will inherit Kellynch Hall as the danger of her marrying Sir Walter has passed. Once Anne and Wentworth have married, Wentworth helps Mrs Smith recover the remaining assets that William had kept from her. Anne settles into her new life as the wife of a Navy captain.
