In the Court of Chancery, where civil suits are decided, there is an inheritance case called Jarndyce and Jarndyce that has been going on for several generations. One guy has actually committed suicide over it. Ada Clare and Richard Carstone are orphans connected with the case. Esther Summerson is a girl raised in isolation by an angry aunt. The three are united one day by a man named John Jarndyce (Ada and Richard's distant cousin), who spends his money on random philanthropic causes all around the country.
Meanwhile, the very old, rich, important, and fashionable Dedlock family has a loyal attorney named Tulkinghorn, who takes the reputation of the Dedlocks very seriously. Lady Dedlock is also marginally connected with the Jarndyce case, and one she day pays an unusual amount of attention to the handwriting on one of Tulkinghorn's legal documents. This seems minor, but it makes Tulkinghorn go crazy with suspicion, and he begins investigating.
The guy whose handwriting it is calls himself Nemo. He lives in a tiny room in the house of a weird old man named Krook, who keeps a warehouse full of odds and ends that he calls a store. Just as Tulkinghorn finds him, Nemo kills himself by an overdose of opium. We don't know whether this was an accident or a suicide. At the inquest, the only person who knew Nemo is a street sweeper boy named Jo, who is as poor and sad a human as ever could be. Illiteracy, dirt, malnourishment, lack of education – you name it, Jo has it. Tulkinghorn tells the Dedlocks the story of Nemo.
Esther becomes Ada's governess, and the two of them and Richard live with Mr. Jarndyce, who tries to find a profession for Richard. Sadly, though, Richard is fixated on the court case and thinks that any minute now the case will be decide and he'll be filthy rich. So he tries being a doctor, then a lawyer, then an army officer, but nothing sticks. Meanwhile, Esther makes all sorts of friends: Miss Flite, a nice but totally crazy old woman who comes to court every day thinking it's the Day of Judgment from the Bible; Caddy Jellyby, the daughter of a woman who is only interested in doing philanthropy in Africa and horribly neglects her own family; Alan Woodcourt, a doctor who treats the poor; and Jenny and Liz, two abused wives of bricklayers who live a poor, sad existence.
One day a veiled but obviously wealthy woman finds Jo and makes him take her to all the places associated with Nemo – where he lived and died, where he worked, and where he was buried. Jo is later found by Tulkinghorn and his detective, Bucket. When they show him another, similarly veiled woman, Jo recognizes the clothes but it's not the same woman. She turns out to be Hortense, Lady Dedlock's ex-maid, who is furious at having been fired. She becomes even more furious when Tulkinghorn doesn't find her a job.
The pieces of the mystery start gradually falling into place. Mr. George, an ex-army trooper, has a letter from a Captain Hawdon, which Tulkinghorn obtains through blackmail. The handwriting matches Nemo's. Bucket sends away Jo, who has been running his mouth a little bit about his adventures with the veiled woman. Jo wanders around, falls ill, and is taken in briefly by Jenny and Liz, who passes him on to Esther. He freaks out because Esther looks so much like the veiled woman, but at the time it just seems like his fever talking. Jarndyce takes Jo in, but the next morning he is gone and can't be found. However, one night with Jo in the house was long enough to get Esther sick (with some kind of pox, we're guessing). Although she recovers, her face is left disfigured by scars. Jarndyce asks her to marry him and she accepts. Richard and Ada secretly get married, but Richard is still obsessed with the Jarndyce suit. Ada becomes pregnant.
From her own mild investigations, Lady Dedlock has figured out that Nemo was Captain Hawdon, and that the baby that she had with him (out of wedlock) didn't actually die but was raised by her crazy sister. She finds Esther, confesses to being her mom, then tells her they can never see each other again.
Too bad Tulkinghorn has put the whole thing together too. He tells Lady Dedlock that he's going to tell her husband the truth any day now. But that night, he is shot and killed. Bucket arrests Mr. George for murder, based on some pretty good circumstantial evidence. In reality, though, he is doing major detective work and figures out that the real killer is Hortense! Meanwhile, thinking that she is about to be exposed and maybe even accused of murder, Lady Dedlock runs away. Bucket sets off to find her, bringing Esther with him. They chase her around the country, up north, then back south to London. They finally find Lady Dedlock dead in the cemetery where Captain Hawdon had been buried.
Woodcourt tells Esther that he loves her and always has, but it's too late – she is already engaged. She gets ready to marry Jarndyce but is none too psyched about it. At the last minute, Jarndyce reveals a big surprise: he's been setting up a house for her and Woodcourt all this time, ever since he realized she would be much happier with Woodcourt than with him. Suddenly the Jarndyce case implodes. All the inheritance money has been spent on court fees, and since there is no more money, there is no more case. Richard is freed from his obsession and dies. Mr. George is reunited with his mother, the Dedlock housekeeper. Sir Dedlock is heartbroken over the fate of his wife and never quite recovers. Ada has a baby and lives at Jarndyce's house. Esther and Woodcourt are happily married with two kids.