Sweet Bird of Youth opens in a room at the Royal Palms Hotel in the fictional Gulf Coast town of St. Cloud. Chance Wayne, an infamous local, has returned to the town after years of trying to make it in Hollywood. He was run out of town years ago after infecting Heavenly Finley, the daughter of a local politician, with some kind of venereal disease, which he picked up while working as a gigolo. Now, he has returned with a client, the faded movie star, Alexandra Del Lago (who goes by "Princess") in hopes of impressing his childhood sweetheart and reestablishing his good name in the town.
Upon arriving back in St. Cloud, Chance learns that Heavenly contracted a venereal disease from him the last time he was there, and that she is now engaged to George Scudder, the man who cut the disease out of her, a surgery which rendered her infertile. When Princess awakens in the hotel room from an intoxicated and pill-induced slumber, she can hardly remember who Chance is and suffers a panic attack. He calms her down and surreptitiously turns on a tape recorder near the bed.
In the midst of their conversation, Chance reminds Princess who he is and she takes out some illegal hashish from under the bed. After they smoke it, Chance tells Princess that he's recorded their conversation, and blackmails her. He says that she must write some checks on his behalf, so that he can win his childhood sweetheart back, in exchange for his silence about the hashish. Princess agrees.
Chance sets to work trying to win Heavenly back. Meanwhile, Heavenly's father, Boss Finley, prepares to host a political rally in which he will distance himself from a recent act of castration against a random black resident of the town. In the same speech, he will advocate for segregation, citing the vulnerability of white women. He has requested that his two children, Heavenly and Tom Jr., attend the rally with him.
That night, a group assembles around the rally, while news of Chance's presence in St. Cloud becomes more widely known. Chance, unable to connect with Heavenly, returns to the cocktail lounge at the hotel, where Heavenly's Aunt Nonnie tries to convince him to leave town. He insists on staying and comes face-to-face with Boss Finley, Tom Jr., and Heavenly, who does not pay him any mind. Tom Jr. and some of the other local boys threaten to hurt and even kill Chance for the crimes he has committed against Heavenly.
As Boss begins his speech during the rally, the Heckler interrupts and makes reference to Heavenly's recent operation. The crowd falls upon the Heckler as Boss tries to save face. Chance goes to Princess's room, where he makes her call her entertainment-journalist friend, Sally Powers, in hopes that she can give him and Heavenly careers in Hollywood, his only hope (or so he believes) for winning her back. When Princess talks to Sally, she learns that her last movie unexpectedly did well and that she is making a Hollywood comeback. When she hangs up, she tells Chance that she does not need him anymore because she's a big star. As she leaves the hotel, she asks him if he wants to come with her and continue to be with her, but he opts to stay in St. Cloud and face the violence of his enemies, convinced that his only enemy is time.