Seventeen-year-old Catherine Morland is one of ten children of a country clergyman. Although a tomboy in her childhood, by the age of 17 she is "in training for a heroine" and is excessively fond of reading Gothic novels, among which Ann Radcliffe's Mysteries of Udolpho is a favourite.
Catherine is invited by the Allens, her wealthier neighbours in Fullerton, to accompany them to visit the town of Bath and partake in the winter season of balls, theatre and other social delights. She is soon introduced to a clever young gentleman, Henry Tilney, with whom she dances and converses. Through Mrs. Allen's old schoolfriend Mrs. Thorpe, she meets her daughter Isabella, a vivacious and flirtatious young woman, and the two quickly become friends. Mrs. Thorpe's son John is also a friend of Catherine's older brother, James, at Oxford where they are both students.
The Thorpes are not happy about Catherine's friendship with the Tilneys, as they correctly perceive Henry as a rival for Catherine's affections, though Catherine is not at all interested in the crude John Thorpe. Catherine tries to maintain her friendships with both the Thorpes and the Tilneys, though John Thorpe continuously tries to sabotage her relationship with the Tilneys. This leads to several misunderstandings, which put Catherine in the awkward position of having to explain herself to the Tilneys.
Isabella and James become engaged. James' father approves of the match and offers his son a country parson's living of a modest sum, £400 annually, but they must wait until he can obtain the benefice in two and a half years. Isabella is dissatisfied, but to Catherine she misrepresents her distress as being caused solely by the delay, and not by the value of the sum. Isabella immediately begins to flirt with Captain Tilney, Henry's older brother. Innocent Catherine cannot understand her friend's behaviour, but Henry understands all too well, as he knows his brother's character and habits.
The Tilneys invite Catherine to stay with them for a few weeks at their home, Northanger Abbey. Catherine, in accordance with her novel reading, expects the abbey to be exotic and frightening. Henry teases her about this, as it turns out that Northanger Abbey is pleasant and decidedly not Gothic. However, the house includes a mysterious suite of rooms that no one ever enters; Catherine learns that they were the apartments of Mrs. Tilney, who died nine years earlier. As General Tilney no longer appears to be ill affected by her death, Catherine decides that he may have murdered her or even imprisoned her in her chamber.
Catherine discovers that her over-active imagination has led her astray, as nothing is strange or distressing in the apartments. Unfortunately, Henry questions her; he surmises, and informs her that his father loved his wife in his own way and was truly upset by her death. She leaves, crying, fearing that she has lost Henry's regard entirely. Realizing how foolish she has been, Catherine comes to believe that, though novels may be delightful, their content does not relate to everyday life. Henry does not mention this incident to her again.
James writes to inform her that he has broken off his engagement to Isabella and that she has become engaged instead to Captain Tilney. Henry and Eleanor Tilney are sceptical that their brother has actually become engaged to Isabella Thorpe. Catherine is terribly disappointed, realising what a dishonest person Isabella is. A subsequent letter from Isabella herself confirms the Tilney siblings' doubts, and shows that Frederick Tilney was merely flirting with Isabella. The General goes off to London, and the atmosphere at Northanger Abbey immediately becomes lighter and pleasanter for his absence. Catherine passes several enjoyable days with Henry and Eleanor until, in Henry's absence, the General returns abruptly, in a temper. He forces Catherine to go home early the next morning, in a shocking, inhospitable, and unsafe move that forces Catherine to undertake the 70 miles (110 km) journey alone.
At home, Catherine is listless and unhappy. Henry pays a sudden unexpected visit and explains what happened. General Tilney (on the misinformation of John Thorpe) had believed her to be exceedingly rich as the Allens' prospective heiress, and therefore a proper match for Henry. In London, General Tilney ran into Thorpe again, who, angry and petty at Catherine's refusal of his half-made proposal of marriage, said instead that she was nearly destitute. Enraged, General Tilney, (again on the misinformation of John Thorpe), returned home to evict Catherine. When Henry returned to Northanger, his father informed him of what had occurred and forbade him to think of Catherine again. When Henry learns how she had been treated, he breaks with his father and tells Catherine he still wants to marry her despite his father's disapproval. Catherine is delighted, though when Henry seeks her parents' approval, they tell the young couple that final approval will only happen when General Tilney consents.
Eventually, General Tilney acquiesces, because Eleanor has become engaged to a wealthy and titled man; and he discovers that the Morlands, while not extremely rich, are far from destitute.