King Lear of Britain, elderly and wanting to retire from the duties of the monarchy, decides to divide his realm among his three daughters, and declares he will offer the largest share to the one who loves him most. The eldest, Goneril, speaks first, declaring her love for her father in fulsome terms. Moved by her flattery Lear proceeds to grant to Goneril her share as soon as she has finished her declaration, before Regan and Cordelia have a chance to speak. He then awards to Regan her share as soon as she has spoken. When it is finally the turn of his youngest and favourite daughter, Cordelia, at first she refuses to say anything ("Nothing, my Lord") and then declares there is nothing to compare her love to, nor words to properly express it; she says honestly but bluntly that she loves him according to her bond, no more and no less. Infuriated, Lear disinherits Cordelia and divides her share between her elder sisters.
The Earl of Gloucester and the Earl of Kent observe that, by dividing his realm between Goneril and Regan, Lear has awarded his realm in equal shares to the peerages of the Duke of Albany (Goneril's husband) and the Duke of Cornwall (Regan's husband). Kent objects to Lear's unfair treatment of Cordelia; enraged by Kent's protests, Lear banishes him from the country. Lear then summons the Duke of Burgundy and the King of France, who have both proposed marriage to Cordelia. Learning that Cordelia has been disinherited, the Duke of Burgundy withdraws his suit, but the King of France is impressed by her honesty and marries her nonetheless. The King of France is shocked by Lear's decision because up until this time Lear has only praised and favoured Cordelia ("... she whom even but now was your best object, / The argument of your praise, balm of your age, ..."). Meanwhile, Gloucester has introduced his illegitimate son Edmund to Kent.
Lear announces he will live alternately with Goneril and Regan, and their husbands. He reserves to himself a retinue of one hundred knights, to be supported by his daughters. Goneril and Regan speak privately, revealing that their declarations of love were fake and that they view Lear as a foolish old man.
Gloucester's bastard son Edmund resents his illegitimate status and plots to dispose of his legitimate older brother Edgar. He tricks his father with a forged letter, making him think that Edgar plans to usurp the estate. Earl of Kent returns from exile in disguise (calling himself Caius), and Lear hires him as a servant. At Albany and Goneril's house, Lear and Kent quarrel with Oswald, Goneril's steward. Lear discovers that now that Goneril has power, she no longer respects him. She orders him to reduce the number of his disorderly retinue. Enraged, Lear departs for Regan's home. The Fool reproaches Lear with his foolishness in giving everything to Regan and Goneril and predicts that Regan will treat him no better.
Edmund learns from Curan, a courtier, that there is likely to be war between Albany and Cornwall and that Regan and Cornwall are to arrive at Gloucester's house that evening. Taking advantage of the arrival of the duke and Regan, Edmund fakes an attack by Edgar, and Gloucester is completely taken in. He disinherits Edgar and proclaims him an outlaw.
Bearing Lear's message to Regan, Kent meets Oswald again at Gloucester's home, quarrels with him again and is put in the stocks by Regan and her husband Cornwall. When Lear arrives, he objects to the mistreatment of his messenger, but Regan is as dismissive of her father as Goneril was. Lear is enraged but impotent. Goneril arrives and supports Regan's argument against him. Lear yields completely to his rage. He rushes out into a storm to rant against his ungrateful daughters, accompanied by the mocking Fool. Kent later follows to protect him. Gloucester protests against Lear's mistreatment. With Lear's retinue of a hundred knights dissolved, the only companions he has left are his Fool and Kent. Wandering on the heath after the storm, Edgar, in the guise of a madman named Tom o' Bedlam, meets Lear. Edgar babbles madly while Lear denounces his daughters. Kent leads them all to shelter.
Edmund betrays Gloucester to Cornwall, Regan, and Goneril. He reveals evidence that his father knows of an impending French invasion designed to reinstate Lear to the throne; and in fact, a French army has landed in Britain. Once Edmund leaves with Goneril to warn Albany about the invasion, Gloucester is arrested, and Regan and Cornwall gouge out Gloucester's eyes. As they are doing this, a servant is overcome with rage by what he is witnessing and attacks Cornwall, mortally wounding him. Regan kills the servant and tells Gloucester that Edmund betrayed him; then she turns him out to wander the heath, too.
Edgar, in his madman's disguise, meets his blinded father on the heath. Gloucester, sightless and failing to recognise Edgar's voice, begs him to lead him to a cliff at Dover so that he may jump to his death. Goneril discovers that she finds Edmund more attractive than her honest husband Albany, whom she regards as cowardly. Albany has developed a conscience — he is disgusted by the sisters' treatment of Lear and Gloucester—and denounces his wife. Goneril sends Edmund back to Regan. After receiving news of Cornwall's death, she fears her newly widowed sister may steal Edmund and sends him a letter through Oswald. Now alone with Lear, Kent leads him to the French army, which is commanded by Cordelia. But Lear is half-mad and terribly embarrassed by his earlier follies. At Regan's instigation, Albany joins his forces with hers against the French. Goneril's suspicions about Regan's motives are confirmed and returned, as Regan rightly guesses the meaning of her letter and declares to Oswald that she is a more appropriate match for Edmund. Edgar pretends to lead Gloucester to a cliff, then changes his voice and tells Gloucester he has miraculously survived a great fall. Lear appears, by now completely mad. He rants that the whole world is corrupt and runs off.
Oswald appears, still looking for Edmund. On Regan's orders, he tries to kill Gloucester but is killed by Edgar. In Oswald's pocket, Edgar finds Goneril's letter, in which she encourages Edmund to kill her husband and take her as his wife. Kent and Cordelia take charge of Lear, whose madness quickly passes. Regan, Goneril, Albany, and Edmund meet with their forces. Albany insists that they fight the French invaders but not harm Lear or Cordelia. The two sisters lust for Edmund, who has made promises to both. He considers the dilemma and plots the deaths of Albany, Lear, and Cordelia. Edgar gives Goneril's letter to Albany. The armies meet in battle, the British defeat the French, and Lear and Cordelia are captured. Edmund sends Lear and Cordelia off with secret-joint orders from him (representing Regan and her forces) and Goneril (representing the forces of her estranged husband, Albany) for the execution of Cordelia.
The victorious British leaders meet, and the recently widowed Regan now declares she will marry Edmund. But Albany exposes the intrigues of Edmund and Goneril and proclaims Edmund a traitor. Regan falls ill, having been poisoned by Goneril, and is escorted offstage, where she dies. Edmund defies Albany, who calls for a trial by combat. Edgar appears masked and in armour and challenges Edmund to a duel. No one knows who he is. Edgar wounds Edmund fatally, though Edmund does not die immediately. Albany confronts Goneril with the letter which was intended to be his death warrant; she flees in shame and rage. Edgar reveals himself and reports that Gloucester died offstage from the shock and joy of learning that Edgar is alive, after Edgar revealed himself to his father.
Offstage, Goneril, her plans thwarted, commits suicide. The dying Edmund decides, though he admits it is against his own character, to try to save Lear and Cordelia, but his confession comes too late. Soon after, Albany sends men to countermand Edmund's orders. Lear enters bearing Cordelia's corpse in his arms, having survived by killing the executioner. Kent appears and Lear now recognises him. Albany urges Lear to resume his throne, but as with Gloucester, the trials Lear has been through have finally overwhelmed him, and he dies. Albany then asks Kent and Edgar to take charge of the throne. Kent declines, explaining that his master is calling him on a journey and he must follow. Finally, Albany (in the quarto version) or Edgar (in the folio version) implies that he will now become king.