British schoolmistress, Adela Quested, and her elderly friend, Mrs. Moore, visit the fictional Indian city of Chandrapore. Adela is to decide if she wants to marry Mrs. Moore's son, Ronny Heaslop, the city magistrate.
Meanwhile, Dr. Aziz, a young Indian Muslim physician, is called from dining with friends by Major Callendar, Aziz's superior at the hospital, but is delayed. Disconsolate at finding him gone, Aziz walks back and enters his favourite mosque on impulse. Seeing Mrs Moore there, he yells at her not to profane this sacred place, but the two then chat and part as friends. When Mrs. Moore relates her experience later, Ronny becomes indignant at the native's presumption.
Because the newcomers had expressed a desire to meet Indians, Mr. Turton, the city tax collector, invites several to his house, but the party turns out awkwardly, due to the Indians' timidity and the Britons' bigotry. Also there is Cyril Fielding, principal of Chandrapore's government-run college for Indians, who invites Adela and Mrs. Moore to a tea party with him and a Hindu-Brahmin professor named Narayan Godbole. At Adela's request, he extends his invitation to Dr. Aziz.
At the party, Fielding and Aziz become friends and Aziz promises to take Mrs. Moore and Adela to see the distant Marabar Caves. Ronny arrives and, finding Adela "unaccompanied" with Dr. Aziz and Professor Godbole, rudely breaks up the party.
Aziz mistakenly believes that the women are offended that he has not followed through on his promise and arranges an outing to the caves at great expense to himself. Fielding and Godbole are supposed to accompany the expedition, but they miss the train. In the first cave they visit, Mrs. Moore is overcome with claustrophobia and disturbed by the echo. When she declines to continue, Adela and Aziz climb the hill to the upper caves, accompanied by a guide.
Asked by Adela whether he has more than one wife, Aziz is disconcerted by her bluntness and ducks into a cave to compose himself. When he comes out, he is told by the guide that Adela has gone into a cave by herself. After quarreling with the guide, Aziz discovers Adela's field glasses broken on the ground and puts them in his pocket. He then looks down the hill and sees Adela speaking to Miss Derek, who has arrived with Fielding in a car. Aziz runs down and greets Fielding, but Miss Derek and Adela drive off, leaving Fielding, Mrs. Moore and Aziz to return to Chandrapore by train.
Aziz is arrested on arrival and charged with sexually assaulting Adela. The run-up to his trial increases racial tensions. Adela alleges that Aziz followed her into the cave and that she fended him off by swinging her field glasses at him. The only evidence is the field glasses in the possession of Aziz. When Fielding proclaims his belief in Aziz's innocence, he is ostracised and condemned as a blood-traitor.
While awaiting the trial, Mrs Moore becomes concerned at her failing health; taking a ship to England, she dies on the way. Then during the trial, Adela admits that she had been similarly disoriented by the cave's echo. She was no longer sure who or what had attacked her and, despite great demand to persist in her accusation, withdraws the charge. When the case is dismissed, Heaslop breaks off his engagement to Adela and she stays at Fielding's house until a return to England is arranged.
Although he is vindicated, Aziz is angry that Fielding befriended Adela after she nearly ruined his life. Believing it to be the gentlemanly thing to do, Fielding convinces Aziz not to seek monetary redress, but the men's friendship suffers and Fielding departs for England. Believing that he is leaving to marry Adela for her money, and bitter at his friend's perceived betrayal, Aziz vows never again to befriend a white person.
Two years later, Aziz has moved to the Hindu-ruled state of Mau and is now the Raja's chief physician by the time Fielding returns, married to Stella, Mrs. Moore's daughter from a second marriage. Though the two meet and Aziz still feels drawn to Fielding, he realises that they cannot be truly friends until India becomes independent from British rule.
