The novel opens at Miss Pinkerton's Academy for young women, where readers are introduced to Amelia and Becky, the novel's female protagonists. Amelia and Becky are friends, but they are nothing alike. Amelia is kind and innocent and comes from a family with money. Becky Sharp, on the other hand, is sharp and scheming and emerges from an impoverished situation. Miss Pinkerton, utterly disgusted with Becky's behavior, sets her up in a governess position at the Crawley estate.
Before she takes her position, Becky spends a little over a week at Amelia's home. She spends her time ingratiating herself with the Sedleys and wooing Amelia's brother Jos, an overweight, shy and vain tax collector on break from his job in India. Becky nearly succeeds in arranging the marriage, until George, Amelia's love interest, steps in and convinces Jos he has behaved like a fool. Jos, humiliated, abandons home and Becky, furious with George, moves on to her job.
The Crawleys are a rather despicable bunch and nothing like what Becky suspected. They are all scheming for the inheritance of Aunt Matilda, who is ill. Becky once again ingratiates herself with the family and earns the particular affections of Sir Pitt and Rawdon, who both ask for her hand in marriage. She admits begrudgingly to Sir Pitt that she agreed to marry Rawdon in secret, and everyone in the family is outraged when they hear this news.
Meanwhile, Amelia pines over George, who disrespects and disregards her while he is in the military. Dobbin, who is George's closest friend and who is also secretly in love with Amelia, begs him to treat her kindly. George eventually agrees to marry Amelia, but just as his father predicted, the Sedleys come to financial ruin because of Mr. Sedley's poor business decisions. George's father disowns him in response to Dobbin's efforts to get him to accept the marriage.
The Duke of Wellington has declared war on Napoleon's army; since all the men are in the military, everyone goes to Belgium to prepare for the war. When the husbands go off to fight, the general's wife takes care of the women who are left behind. Amelia worries about George, and Rawdon mourns having to leave Becky, but Becky seems unconcerned about her soon-to-be husband and instead appears to be developing a flirtation with George. Unfortunately, George dies in the Battle of Waterloo.
Sir Pitt, in the wake of his second wife's death, takes up with his butler's daughter, causing scandal at the household. The young Pitt Crawley finds a sweet wife who manages to earn the approval of Aunt Matilda, who never thought much of the older of Sir Pitt's sons. Both Amelia and Becky give birth to sons, and for a while Becky and Rawdon manage to live well on very little money; Becky is skilled at avoiding payments. The Sedleys, on the other hand, continue to slip further into financial ruin. Amelia sends Georgy, her son, to live with the Osbornes because of her difficult situation.
When Sir Pitt dies, young Mr. Crawley inherits the estate and Aunt Matilda's money, and he invites Becky and Rawdon and their son to come live with him. Becky ingratiates herself with a man named Lord Steyne, who brings her out into society, sends little Rawdon, her son, away from school, and generally distracts her from her husband. When she neglects to send money to get Rawdon out of prison, where he has landed himself for unpaid gambling debts, he decides to investigate her new relationship. When he returns home, he finds jewels in her belongings, and he decides to duel Lord Steyne. The fight is avoided, but Rawdon moves away.
Dobbin returns to England, and he finds Amelia, who is still grieving the loss of George. Dobbin stays anyway to help Amelia care for her son. Mr. Osborne dies and leaves some of his money for Amelia and Georgy, and three of them go off to Europe, where they find Becky. Becky admits to Amelia that she had been developing a relationship with George, and Amelia finally comes to her senses, sees George for who he really was, and marries Dobbin.