Walter Hartright, a young art teacher, encounters and gives directions to a mysterious and distressed woman dressed entirely in white, lost in London; he is later informed by policemen that she has escaped from an asylum. Soon afterwards, he travels to Limmeridge House in Cumberland, having been hired as a drawing teacher on the recommendation of his friend, Pesca, an Italian language teacher. The Limmeridge household comprises the invalid Frederick Fairlie and Walter's students: Laura Fairlie, Mr. Fairlie's niece, and Marian Halcombe, her devoted half-sister. Walter realises that Laura bears an astonishing resemblance to the woman in white, who is known to the household by the name of Anne Catherick, a mentally disabled child who formerly lived near Limmeridge and was devoted to Laura's mother, who first dressed her in white.
Over the next few months, Walter and Laura fall in love, despite Laura's betrothal to Sir Percival Glyde, Baronet. Upon realising this, Marian advises Walter to leave Limmeridge. Laura receives an anonymous letter warning her against marrying Glyde. Walter deduces that Anne has sent the letter and encounters her again in Cumberland; he becomes convinced that Glyde originally placed Anne in the asylum. Despite the misgivings of the family lawyer over the financial terms of the marriage settlement, which will give the entirety of Laura's fortune to Glyde if she dies without leaving an heir, and Laura's confession that she loves another man, Laura and Glyde marry in December 1849 and travel to Italy for six months. Concurrently, Walter joins an expedition to Honduras.
After six months, Sir Percival and Lady Glyde return to his house, Blackwater Park in Hampshire; accompanied by Glyde's friend, Count Fosco (married to Laura's aunt). Marian, at Laura's request, resides at Blackwater and learns that Glyde is in financial difficulties. Glyde attempts to bully Laura into signing a document that would allow him to use her marriage settlement of £20,000, which Laura refuses to do. Anne, who is now terminally ill, travels to Blackwater Park and contacts Laura, saying that she holds a secret that will ruin Glyde's life. Before she can disclose the secret, Glyde discovers their communication, and believing Laura knows his secret, becomes extremely paranoid and attempts to keep her held at Blackwater. With the problem of Laura's refusal to give away her fortune and Anne's knowledge of his secret, Fosco conspires to use the resemblance between Laura and Anne to exchange their two identities. Sir Percival and Fosco will trick both individuals into travelling with them to London; Laura will be placed in an asylum under the identity of Anne, and Anne will be buried under the identity of Laura upon her imminent death. Marian overhears enough of the plan to understand they are conspiring against someone's life but not any of the details, but becomes soaked by rain in her hiding place and falls ill.
While Marian is ill, Laura is tricked into travelling to London, and the identity switch is accomplished. Anne Catherick succumbs to her illness and is buried as Laura, while Laura is drugged and conveyed to the asylum as Anne. When Marian visits the asylum, hoping to learn something from Anne, she finds Laura, who has been treated by her attendants as a deluded Anne when she protests her true identity as Laura. Marian bribes the nurse, and Laura escapes. Meanwhile, Walter has returned from Honduras, and the three live incognito in London, making plans to restore Laura's identity. During his research, Walter discovers Glyde's secret: he was illegitimate, and therefore not entitled to inherit his title or property. In the belief that Walter has discovered or will discover his secret, Glyde attempts to incinerate the incriminating documents but perishes in the flames. From Anne's mother (Jane Catherick), Walter discovers that Anne never knew what Glyde's secret was. She had only known that there was a secret around Glyde and had repeated words her mother had said in anger to threaten Glyde. The truth was that Glyde's mother was already married to an Irish man, who had left her, and was not free to remarry. While he had no problem claiming the estate, Glyde needed his parents' marriage certificate to borrow money. He therefore went to a church in the village where his parents had lived together and where the vicar, who had served there, had died long ago, and added a fake marriage to the church register. Mrs. Catherick helped him obtain access to the register and was rewarded with a gold watch and an annual payment.
During the period of Glyde and Mrs. Catherick's relationship, a vestry-clerk from a nearby town made regular visits to the church and made copies of the church's marriage register. These duplicates were kept safely in the vestry-clerk's office in town. Walter, knowing of the suspect entry in the church register, goes to the vestry-clerk's office, obtains the duplicate, and finds that no such entry exists in it, thus confirming the original register contained a fake entry.
With the death of Glyde in a fire while attempting to destroy the original (fake) of the register in the church, the trio is safe from persecution, but they still have no way of proving Laura's true identity. Walter suspects that Anne died before Laura's trip to London, and proof of this would prove their story, but only Fosco knows the dates. Walter works out from a letter he received from Mrs. Catherick's former employer that Anne was the illegitimate child of Laura's father, making her Laura's half-sister. On a visit to the opera with Pesca, he learns that Fosco has betrayed an Italian nationalist society, of which Pesca is a high-ranking member. When Fosco prepares to flee the country, Walter forces a written confession from him in exchange for safe passage from England. Laura's identity is legally restored, and the inscription on her gravestone replaced by that of Anne Catherick. Fosco escapes, only to be killed by another agent of the society. To ensure the legitimacy of his efforts on her part, Walter and Laura have married earlier; upon the death of Frederick Fairlie, their son inherits Limmeridge.
