Henchard has committed the unpardonable crime of auctioning off his wife and daughter. But he tries to make up for it: he swears not to drink alcohol for twenty years and he works hard to become an upright citizen. He gets rich and powerful, but he isn't happy – he's lonely and often gloomy. He falls into a fit of despair while traveling in Jersey, and a young woman named Lucetta nurses him back to health. Everyone assumes they are lovers (they aren't!), and her reputation is ruined. She wants him to marry her to save her reputation, but he can't; what if his first wife comes back?
Henchard's wife, Susan, shows up with her daughter, Elizabeth-Jane. He remarries her and everything seems great. Henchard hires a new manager, Donald Farfrae, who whips his business into shape. Henchard and Farfrae become close friends, and Elizabeth-Jane develops a crush on the new manager.
Henchard becomes jealous of his friend and manager, Farfrae. He finds an excuse to dismiss him, and Farfrae moves across town and opens his own business. He's careful not to steal any of Henchard's customers, but Henchard becomes even more angry and jealous.
Susan dies, leaving Henchard free to get married to Lucetta, the young woman from Jersey. She falls in love with Farfrae, though, and wants to back out of her promise to marry Henchard. She marries Farfrae on the sly. Henchard's business has been going sour and he finally has to declare bankruptcy. Farfrae buys his business and hires Henchard to work for him. Henchard threatens to kill Farfrae, but can't follow through. Lucetta is terrified that Farfrae will find out about her past relationship with Henchard.
The past relationship between Henchard and Lucetta becomes common knowledge in the town. Lucetta is so afraid Farfrae will stop loving her that she falls into hysterics and dies. Farfrae realizes Elizabeth-Jane would make a better wife, and after a decent amount of time they get engaged. Henchard decides he should just leave Casterbridge rather than wait around for Elizabeth-Jane to find out that he's been deceiving her all this time. He leaves town just before Newson, her real father, shows up to tell her the truth. She marries Farfrae, then they set off to find Henchard. They find him just after he dies.