When the book begins, the narrator, whose real name we never learn, is being held with other women in an old school gym. We later find out this is called the Women's Center. When we see her again, she's been working for five weeks as a Handmaid. The house where she works is run by a married Commander, whom the narrator must have sex with on a regular basis, in a standard Ceremony, in an attempt to become pregnant and provide the household with a child. The narrator has one uniform, assigned tasks, and very little freedom. She's confined to her room except for the times where she can go out, supervised, to do shopping or go to prescribed events. She frequently thinks about the Handmaid who preceded her, who killed herself.
The book's "present" action is the story of the narrator's time in this house, but throughout the book she has frequent flashbacks to various times in her life: her relationship with her husband Luke, their daughter, and her mother; the escape attempt she and Luke made; her friendship with Moira, the rebel; and her time at the Women's Center, where she is when the book starts.
Flashbacks to life before the Center: Before the narrator arrives at the Center, she is happily married to Luke (as his second wife) and they have a small daughter. She works at a library. Her best friend, Moira, and her mother are both active feminists concerned about changes that are happening: fewer children are being born, there's lots of disease, and the world is rapidly becoming polluted.
When a coup happens and the government collapses, the narrator loses her job and access to money, as do all women. Her life becomes more and more restricted, and her mother disappears. She and Luke decide to take their daughter and try to cross the border and run away. They get fake papers and almost make it across the border when they realize someone's onto them and have to make a run for it. The narrator and her daughter are captured and separated, and the narrator is drugged. When she wakes up people tell her she's not a good mother, and take her to the Center. She doesn't know what's happened to Luke.
Flashbacks to the Center: At the Center, the women are stripped of their real names, their voices, and their rights. They're indoctrinated into the religious-based ideas of this new society, where they will be Handmaids. Their roles will be to have emotionless, non-erotic sex with high-powered men in order to provide society with children. Some women, like one called Janine, are totally broken by this demeaning experience. The narrator is happy when her friend Moira is brought in, just so she'll have an ally. But Moira tries to escape twice. The first time, she is unsuccessful and is brought back by force and beaten severely. The second time, it seems like she makes it, at least for a while.
As the narrator's memories and flashbacks take up more and more of her mental space, she slowly becomes more reckless and eager to act out, even if it means the end for her. This is her third, final position as a Handmaid. If she doesn't have a child by this Commander, she'll meet a tragic fate. On her daily walks with another Handmaid, Ofglen, the two women slowly open up to each other. As the women's relationship develops they attend different events, such as a Prayvaganza (with marriage ceremonies) and the birth of a daughter to a Handmaid's household by Ofwarren (called Janine at the Center). The narrator eventually learns that Ofglen is working for the resistance. Ofglen tells the narrator the resistance's secret password, which is Mayday.
The Commander the narrator works for asks her to start meeting him secretly, and she does, even though it's super dangerous. At first he just wants to play Scrabble, but eventually he ends up smuggling the narrator to a brothel, Jezebel's, where she runs into her old friend Moira. Before the Commander makes the narrator sleep with him at Jezebel's (and therefore outside their Ceremony), the narrator gets to hear Moira's story.
Moira's story: Moira escapes from the Center a second time by turning a piece of a toilet into a weapon and holding a female guard hostage. Then she dresses like the guard and walks out without suspicion. She makes it to a Quaker safe house, and the people there smuggle her around from house to house for almost nine months. She almost gets to safety, but at the last stage of her journey something goes wrong and she's captured. We don't know exactly what happens to her after that, except that it's really, really bad. She chooses to end up working at Jezebel's rather than the alternative, which is to go work in the Colonies (which are completely radioactive and poisonous), which would mean death.
After the narrator and the Commander go to Jezebel's, things start to slip out of control. The Commander's Wife arranges for her to have sex with their chauffeur, Nick, in the hope that she'll get pregnant and bring a child into the house. In exchange, the Commander's Wife shows the narrator a picture of her abducted daughter. The narrator starts having sex with Nick first out of duty, then begins to have feelings for him. She tells him secrets about her past and starts to think that she may be pregnant.
One day the narrator and Ofglen have to go to a Women's Salvaging, a public execution where only women are present. While they are there, the narrator finds out Janine's baby didn't make it. The execution is run by Aunt Lydia, one of the people who ran the Center. Three women, two Handmaids and a Wife, are executed. Then Aunt Lydia brings out a man, accuses him of rape, and tells the women they are going to have a Particicution. Basically, this means the women can rip this man to shreds. The narrator is horrified, but Ofglen rushes in and kicks the man in the head. Afterward, she explains to the narrator that she was helping the man, because he was on the side of the resistance. They leave.
When the narrator goes to meet Ofglen later for their standard walk, she isn't there. Another woman like Ofglen is there in her place. The narrator tries out the password and this new Ofglen rebuffs her before telling her that the first Ofglen killed herself. Shocked, the narrator goes home, where the Commander's Wife has found out that the narrator was secretly seeing the Commander and chews her out.
The narrator goes to her room to await the punishment she knows is coming. She sees a black van coming – which is the sign you're about to get arrested or killed. Before the van arrives, Nick comes in and tells her that it's the resistance coming to get her out. The narrator doesn't know whether to trust him or not, and when the men come in to get her she can't tell if they're on her side. They escort her out of the Commander's house, her fate uncertain.
While the narrator's story has concluded, the book has one more chapter. In this section, called "Historical Notes," we hear from a professor who has done research on the narrator's story and tries to figure out what happened to her. He reveals that the story was actually recorded onto tapes, which he and another professor transcribed and edited into a single narrative. He says the tapes are probably legitimate, but he can't identify who the narrator or any of the other characters really were – with the exception of the Commander, whom he provides a potential alias for. The professor doesn't know how the narrator's story ended. He guesses she made it at least partially to safety, long enough to record these tapes, even if she was recaptured afterward.