The story opens with the town of Güllen preparing for the arrival of famed billionaire Claire Zachanassian, who grew up there. Güllen has fallen on hard times, and the townspeople hope that Claire will provide them with much-needed funds. Alfred Ill, the owner of Güllen's general store and the most popular man in town, was Claire's lover when they were young, and agrees with the mayor that the task of convincing her to make a donation should fall to him. Claire arrives, accompanied by her husband. She begins a flirtatious exchange with Alfred, who pretends to find her as delightful as ever, even though they are now both in their sixties and significantly overweight. Claire draws Alfred's attention to her prosthetic leg and artificial hand.
After settling into the hotel, Claire joins the rest of the town, who have gathered outside for a homecoming celebration. Claire takes the opportunity to announce that she will make a huge donation: one billion (presumably Swiss francs), half for the town and half to be shared among the families. The townspeople are overjoyed, but their happiness is dampened when Claire's butler steps forward to reveal her condition for the donation. The butler was once the Lord Chief Justice of Güllen, and had heard the paternity suit that Claire had brought against Alfred in 1910. In the suit, Alfred produced two false witnesses (who have since been transformed into Claire's eunuchs), and the court ruled in his favor. Alfred went on to marry Mathilde, who owned the general store. Claire, meanwhile, moved to Hamburg and became a prostitute; her child died after one year. Her donation is conditional on someone's killing Alfred. The mayor refuses and the town seems aghast, but Claire says that she will wait.
As time passes, Alfred becomes increasingly paranoid as he sees everyone purchasing especially costly items on credit in his shop. Alfred visits the police officer and the mayor, who have also bought new expensive items, and they dismiss his concerns. He then visits the priest, who attempts to calm him, but finally admitting they have been paid off, and advises Alfred to flee.
Alfred heads to the railway station to escape, but finds that the entire town is gathered there. They ask him where he is going, and he says that he is planning to move to Australia. They wish him well, again assuring him that he has nothing to fear in Güllen, but Alfred grows increasingly nervous nonetheless. The train arrives, but he decides not to board, believing that someone will stop him anyway. Paralyzed, he collapses in the crowd, crying, "I'm lost!"
Claire weds a new husband in the Güllen cathedral. The doctor and the schoolmaster go to see her and explain that the townspeople have run up considerable debt since her arrival. The schoolmaster begs her to abandon her desire for vengeance and help the town out of the goodness of her heart. She reveals to them that she already actually owns all the properties in town, and that she is the reason the businesses have been shut down.
In the meantime, Alfred has been pacing the room above the general store, his terror growing as the townspeople buy more and more expensive products on credit. Having received word of Claire's wedding, reporters are everywhere, and they enter the store to interview Alfred. The schoolmaster, drunk, tries to inform the press about Claire's proposal, but the townspeople stop him. After the confusion has cleared, the schoolmaster and Alfred have an honest discussion. The schoolmaster explains that he is certain that Alfred will be killed and admits that he will ultimately join the ranks of the murderers. Alfred calmly states that he has accepted his guilt and acknowledges that the town's suffering is his fault. The schoolmaster leaves, and Alfred is confronted by the mayor, who asks whether Alfred will accept the town's judgment at that evening's meeting. Alfred says that he will. The mayor then suggests that Alfred make things easier on everyone and shoot himself, but Alfred refuses, insisting that the town must go through the process of judging and killing him.
Alfred goes for a ride in his son's newly purchased car, accompanied by his wife and daughter, both of whom are wearing new outfits. Alfred says that he is going for a walk in the woods before heading to the town meeting. His family continues on to the movie theater. In the woods, Alfred comes across Claire, who is walking with her newest husband. Claire tells Alfred that she never stopped loving him, but that over time her love has grown into something monstrous.
When Alfred arrives at the town meeting, it is flooded with press, and the town publicly announces acceptance of Claire's donation. The inhabitants then go through the formality of a vote, which is unanimous, and the mayor states that they have Alfred to thank for their newfound wealth. The doors are locked and the lights dimmed. Alfred is killed by a townsman. Just as a reporter reappears in the auditorium, the doctor announces that Alfred has died of a heart attack. The reporters gather and declare that Alfred has died of joy. Claire examines the body, gives the mayor his cheque, and leaves the town with Alfred's body in the casket that she brought with her when she arrived.