The Handmaid's Tale is set in the Republic of Gilead, a theocratic military dictatorship formed within the borders of what was formerly the United States of America.
Beginning with a staged terrorist attack (blamed on Islamic extremists) that kills the President and most of Congress, a movement calling itself the "Sons of Jacob" launches a revolution and suspends the United States Constitution under the pretext of restoring order. They are quickly able to take away all of women's rights, largely attributed to financial records being stored electronically and labelled by gender. The new regime, the Republic of Gilead, moves quickly to consolidate its power and reorganize society along a new militarized, hierarchical, compulsorily Christian regime of Old Testament-inspired social and religious ultra-conservatism among its newly created social classes. In this society, almost all women are forbidden to read.
The story is presented from the point of view of a woman called Offred (literally Of-Fred). The character is one of a class of women kept as concubines ("handmaids") for reproductive purposes by the ruling class in an era of declining births due to sterility from pollution and sexually transmitted diseases. The book is told in the first person by Offred, who describes her life during her third assignment as a handmaid, in this case to Fred (referred to as "The Commander"). Interspersed in flashbacks are portions of her life from before and during the beginning of the revolution, when she finds she has lost all autonomy to her husband, through her failed attempt to escape with her husband and daughter to Canada, to her indoctrination into life as a handmaid. Offred describes the structure of Gilead's society, including the several different classes of women and their circumscribed lives in the new theocracy.
The Commander is a high-ranking official in Gilead. Although he is only supposed to have sex with Offred during "the Ceremony", a ritual at which his wife is present, he begins an illegal and ambiguous relationship with her. He reveals to her hidden or contraband aspects of the new society, such as fashion magazines and cosmetics. He takes her to a secret brothel run by the government, and he furtively meets with her in his study, where he allows her to read, an activity otherwise prohibited for women. The Commander's wife, Serena Joy, also has secret interactions with Offred, arranging for her secretly to have sex with Nick, Serena's driver, in an effort to get Offred pregnant. In exchange for Offred's cooperation, Serena Joy gives her news of her daughter, whom Offred has not seen since she and her family were captured trying to escape Gilead.
After Offred's initial meeting with Nick, they begin to rendezvous more frequently. Offred discovers she enjoys sex with Nick, despite her indoctrination and her memories of her husband. She shares potentially dangerous information about her past with him. Through another handmaid, Ofglen, Offred learns of the Mayday resistance, an underground network working to overthrow Gilead. Shortly after Ofglen's disappearance (later discovered to be a suicide), the Commander's wife finds evidence of the relationship between Offred and the Commander. Offred contemplates suicide. As the novel concludes, she is being taken away by men from the secret police, the Eyes of God, known informally as "the Eyes", under orders from Nick. Before she is put in the large black van, Nick tells her that the men are part of the Mayday resistance and that Offred must trust him. Offred does not know if Nick is a member of the Mayday resistance or a government agent posing as one, and she does not know if going with the men will result in her escape or her capture. She enters the van with her future uncertain.
The novel concludes with a metafictional epilogue that explains that the events of the novel occurred shortly after the beginning of what is called "the Gilead Period". The epilogue is "a partial transcript of the proceedings of the Twelfth Symposium on Gileadean Studies" written in 2195. According to the symposium's "keynote speaker" Professor Pieixoto, he and colleague Professor Knotly Wade discovered Offred's story recorded onto cassette tapes. They transcribed the tapes, calling them collectively "the handmaid's tale". Through the tone and actions of the professionals in this final section of the book, the world of academia is highlighted and critiqued. The epilogue implies that, following the collapse of the theocratic Republic of Gilead, a more equal society re-emerged with a restoration of full rights of women and freedom of religion.