The film opens at a business luncheon held at the Los Angeles home of Phil Stuckey, who is the attorney of Edward Lewis, a prominent and successful businessman. Phil hovers around the party anxiously, while Edward remains somewhat detached. In a room away from the party, Edward speaks to his girlfriend on the phone, who complains that he is absent and that she speaks to his secretary more than him. Eventually, she breaks up with him, and Edward hangs up the phone. Edward goes downstairs and asks to take Phil's car, a flashy Lotus Esprit, for a drive. Phil does not quite agree, but Edward takes it anyway, getting lost as he tries to make his way to Beverly Hills.
Vivian Ward, an attractive young prostitute, is getting ready for the night, but she realizes the rent money is gone. She goes to Hollywood Boulevard to find her roommate and ask after the rent money, and begin her night shift. At the Blue Banana Club, Vivian meets her roommate, Kit, who she is dismayed to find has spent their rent money on drugs. Edward pulls up in the Lotus Esprit, and Vivian goes to his car, hoping for a wealthy customer. When Edward asks Vivian for directions, she charges him $20. When he agrees, she gets in and shows him the way. Vivian is enthusiastic about the car and Edward lets her drive it to the hotel. He drops her off and she sits waiting at a bus stop.
Edward says his goodbyes, but has a change of heart and invites her into the hotel. Vivian is clearly out of place in the very posh hotel. They arrive at Edward's penthouse suite, and he reveals he is scared of heights, and never goes out on the balcony, but that he wants the best. Vivian tries to initiate sex, but Edward wants to talk for a while and drink champagne. As they get to know each other, Edward finds himself more and more surprised by Vivian's charm and boldness. Vivian watches television while Edward works. They begin intercourse, and Vivian refuses to kiss him on the mouth. They spend the night together.
We learn that Edward's company is currently taking over a company from the reluctant James Morse. Phil, Edward's attorney, urges him to have dinner with Morse and his grandson, and to bring a date. Edward asks Vivian to spend the week with him as his employee, accompanying him to the dinner and other social engagements. When she agrees, Edward gives her some money to go shopping for more conservative and professional clothes. Once he leaves, Vivian rings Kit and tells her the news. Vivian goes to Rodeo Drive to shop and is told to leave a boutique by a snobby young salesgirl who tells her, "you’re obviously in the wrong place." Vivian returns to the hotel, and is approached by Barnard Thompson, the hotel manager, who offers to help her find a dress for the dinner with Morse.
In Edward’s office, we learn that Morse has a new business deal, which will make buying his business a lot more expensive. Vivian buys a cocktail dress, and returns to her room. She agrees to meet Edward in the lobby in 7:45pm. Barney teaches Vivian dinner table etiquette, in preparation for her evening meal. At 7:45 pm, Edward meets Vivian in the lounge, and is astounded by how beautiful and elegant she looks. They go to dinner with Morse and his grandson, David. Vivian does her best, but struggles with the formal dinner etiquette. Morse asks Edward to leave his company alone, and tells him that he will buy all of Edward’s stocks in his company. Edward doesn't heed Morse's wishes, however, and blocks Morse's business deal through a contact in the appropriations department. Later, on the penthouse balcony, Vivian tells Edward that she suspects him of liking Morse, but Edward steers the conversation and the two agree to not get emotional about business. Edward goes downstairs to think over the dinner. At 3 am, Vivian goes down to see where he is, and finds him playing the piano passionately. They get intimate on the piano, but Vivian refuses to kiss him. They go to bed.
The next day, Vivian tells Edward about her troubles with shopping, so he goes with her to a shop, where he tells the manager he will be spending a lot of money, and Vivian gets fussed over by lots of saleswomen. Philip phones Edward to tell him that Morse is still refusing to sell, so Edward heads to work. After buying lots of new and elegant outfits, Vivian revisits the store that initially refused her, and tells them they made a huge mistake.
Edward is beginning to have second thoughts about his deal with Morse. When he returns home, he finds Vivian in nothing but a tie she got for him. They have a bath together, and Edward tells her about his past and his issues with his father, a prominent businessman who died in the past year. The next day, Edward takes Vivian to a polo match sponsored by his company. He introduces her to Phil and his wife, Elizabeth. Vivian talks to David Morse, who is playing in the polo match. Paranoid, Phil interrogates Edward about Vivian and her job, as he suspects she’s a spy for the Morses. Edward tells him she’s a hooker, and Phil laughs malevolently. He goes and taunts Vivian about it, asking for her services after Edward leaves.
When they return home, Vivian is mad that Edward told Phil about her profession. She storms out, and when Edward tries to give her money, she refuses it. As she’s waiting for the elevator, Edward comes out and apologizes, and she returns with him. After intercourse, Vivian tells Edward about how her awful dating history landed her in Hollywood. She couldn’t make the rent, and after meeting Kit she became a prostitute. The next day, Edward leaves work early to go on a date with Vivian. She wears a stunning red dress and an expensive necklace that Edward got on loan, and he takes her to the opera La Traviata, in San Francisco via private jet. Vivian loves the opera, and cries at the last song. Over chess, Vivian persuades Edward not to work the next day.
On Edward's day off, the couple falls more deeply in love. They go to the park and have a picnic, Edward reads Shakespeare aloud to Vivian, they have in depth conversations over dinner, and they feel like a real couple. As they go to bed, Vivian kisses him on the mouth, and she tells him she loves him. He does not respond. The next morning, Edward asks to see her again, and tells her he has organized an apartment and car for her in New York to get her off the streets. While it is an appealing offer, it does not strike Vivian as particularly romantic, and she tells him that she wants a knight on a white horse to save her, not a sugar daddy. Edward receives a call from Phil, and goes to meet Morse. He tells Vivian that he cannot offer her the romance she wants right now, and she feels even more like a prostitute.
Kit arrives at the hotel, and the friends are reunited. As they talk, Kit can see that Vivian is in love with Edward and tries to convince her that it could work out. In a meeting between Edward and Morse, Morse is ready to sell his business, however regretfully. Edward requests a meeting with Morse alone, and offers to buy his whole company and help it, instead of buying it and taking it apart for a greater profit. Morse tells Edward that he is proud of him, but Edward's decision infuriates Phil. Edward leaves the office to go for a walk, and Phil goes to the hotel to find Vivian. Phil hits Vivian and tries to sexually assault her as he blames her for Edward’s change of heart. Edward comes in just in time, punches Phil, and throws him out. As Edward ices Vivian’s face, she praises him on his decision with Morse. Vivian tells Edward she wants to leave, explaining that she wants the fairy tale, and Edward tells her it is impossible. He gives her money, and she begins to leave. Edward asks her to stay the night without pay, but she refuses. She leaves.
Vivian packs her bag to go to San Francisco and finish high school. She hugs Kit goodbye and gives her money, telling her she has potential. Edward leaves the hotel, asking Barnard to return the necklace. Barnard tells him that Daryll the driver drove Vivian home the previous day, insinuating that Darryl knows where she lives. As Vivian prepares to leave for San Francisco, she hears a car horn out her window. When she looks, Edward is standing out of the sunroof of his car, holding flowers; as opera plays, he proclaims his love for "Princess Vivian." Despite being scared of heights, he climbs the fire escape to get to her. They kiss, and live happily ever after.