The Elliots of Kellynch Hall, a family of minor nobility, are in financial trouble. Their sense of how important they are has long been larger than their bank account allows. The duct-tape patching job they've been doing on their finances is finally falling apart, so they come up with a last-ditch plan: move out of the ancestral mansion and rent out the place to someone else to increase their income. And so the Elliots move out, and the newly rich Admiral Croft and his wife move in.
While the Crofts are total strangers to the Elliots, it turns out Mrs. Croft's brother, Captain Wentworth, is not. In fact, eight years ago Wentworth and the middle Elliot daughter, Anne, had hit it off so well that, after dating for a few months, they were already talking marriage. Wentworth's service in the navy, however, didn't give him enough steady income or social status to please Anne's family and her mentor, Lady Russell. Eventually Lady Russell persuaded Anne to break it off with Wentworth, and Anne has been kicking herself ever since. Meanwhile, Wentworth has struck it rich, but has never gotten back in touch.
Back in the present, Anne's snobby dad Sir Walter, her equally snobby older sister Elizabeth, and Elizabeth's hanger-on Mrs. Clay head off to the fashionable town of Bath where they can show off more cheaply than at home. Anne goes to stay first with Lady Russell, and then with the youngest of the Elliot clan, Mary, who is married with children to Charles Musgrove. Things start to get more exciting (and more awkward) when Captain Wentworth comes to visit his sister. Not only is he still angry at Anne for dumping him, but he's doing some intense flirting with her cousin-in-law, Louisa Musgrove.
Anne and the Musgroves go to the nearby seaside village of Lyme Regis with Wentworth to visit his old friend Captain Harville. As a bonus, they get to meet Harville's cheerful family and his depressed friend, Captain Benwick, who is working through the death of his fiancée by reading the saddest poetry he can find. A fun time is had by all (even Benwick seems to be enjoying himself once he finds out that Anne has read some of his favorite odes to depression), until Louisa tries to show off by leaping off a staircase into Wentworth's arms, but instead takes a headfirst dive into the pavement. While everyone else is staggering about like zombies, only Anne keeps her brains and gets Louisa medical attention.
Louisa stays in bed at Lyme with the Harvilles to avoid knocking her brain about any further, while Anne goes with Lady Russell to see what her dad and sister have been up to in Bath. It turns out they've been making friends with one William Elliot (and yes, he's related to them). Mr. Elliot is going to inherit Kellynch Hall and the family title when Sir Walter dies. The last time the two Elliot branches met, bad stuff went down and they weren't talking to each other for a while, but now all seems to be fine and dandy. Elizabeth has her eye on Mr. Elliot, despite his having blown her off before, but Anne is the one he's interested in.
Anne attends dreary rounds of parties where her family embarrasses her by sucking up to the next rank above them on the social ladder. Then she gets a letter from her sister Mary with the best gossip she's heard in years: Louisa is getting married! But not to Captain Wentworth (phew!). Louisa's brain has been jostled into a liking for poetry, and she and Captain Benwick are planning to make some sweet poetry of their own, leaving Captain Wentworth to look elsewhere for a wife.
And that elsewhere he decides to look turns out to be the town of Bath, as Anne finds out when she runs into him one rainy morning when she is out shopping with Elizabeth, Mrs. Clay, and the attentive Mr. Elliot (who the local gossips are convinced is going to marry Anne). Wentworth and Anne cross paths again at a concert, where Anne realizes both that Wentworth is still madly in love with her – and that he's mad jealous of Mr. Elliot.
Anne visits her old friend Mrs. Smith, who has some dirt to dish on Mr. Elliot: in short, he ruined her life and is a selfish hypocrite. Anne is relieved to have some ammo behind her if her family hassles her about wanting to marry Wentworth instead of Mr. Elliot.
The next time Anne and Wentworth have an opportunity to exchange meaningful glances with each other, as star-crossed lovers tend to do, Anne tries to send him some signals under the radar that he should just propose (again). Apparently some of her signals get through, as Wentworth leaves her a note that basically says "I like you. Do you like me? Check Yes or No" (or it would, if Wentworth were a middle-school girl). Soon after, they run into each other on the street and finally manage to get all their misunderstandings sorted out. Marriage bells ring, even Lady Russell comes around, and all is well.