The novel opens in a place called the Bottom, and the first person we meet is Shadrack. He has returned from WWI a shell-shocked veteran, and when he finally gets out of the hospital after being injured he starts National Suicide Day as a way to cope with death. (This day becomes important by the end of the novel.)
We then meet Helene Sabat, her grandmother Cecile, and her daughter Nel. Helene is very strict, has opinions about everyone and everything, and does a pretty good job of making sure that Nel doesn't have much fun. After Helene and Nel travel to Helene's hometown in an attempt to visit the dying Cecile, Nel starts to rebel. When she returns, she befriends Sula, which marks the start of a lifelong friendship. Helene, however, doesn't approve of Sula's mother, Hannah.
Sula's family is very different from Nel's. Sula's house is always busy and noisy, her mother isn't concerned about what's proper or improper, and her one-legged grandmother Eva entertains a string of men. Some boarders also live in Sula's house, including three boys named Dewey and a man named Tar Baby, whose only interest is drinking himself to death. We soon learn that Hannah has a habit of sleeping with married men, regarding sex as fun and not a big deal. Sula eventually adopts this same attitude, which has some devastating consequences later in the story.
Sula has an uncle named Plum, who returns from war addicted to drugs and on the verge of death. He moves back in to Eva's house and seems to get worse and worse, until one day Eva can't take it anymore. She pours kerosene on him and lights him on fire while he's in bed. We eventually learn that she does this believing she's giving him a death suitable for a man.
We get to know more about the friendship between Sula and Nel, and a lot happens to them throughout the years. Sula learns that her mom doesn't really like her (straight from the horse's mouth, no less); she and Nel are involved in an accident that results in the drowning of a boy named Chicken Little; Sula's mom Hannah dies in a fire; Nel gets married to a man named Jude; and Sula leaves town for ten years, returns, and has an affair with Jude. A few years later, Sula gets involved with a man named Ajax, but when he senses that she's getting too possessive, he takes off. Sula falls ill shortly after that and eventually dies.
The winter after Sula dies is harsh, and the people in the Bottom really suffer from the cold weather. But then January rolls around, the sun comes out, and so does Shadrack with his National Suicide Day. This one is different, though, as a good deal of the townspeople join in his annual march. (Before it's been just him and one or two others.) They make their way to a new tunnel that's under construction, one that blacks have been prevented from working on, and start destroying the supplies and tools to vent their anger at being discriminated against. They eventually enter the tunnel, but it isn't stable and it collapses around them, killing almost everyone in town.
The novel jumps ahead about 25 years. Nel visits Sula's grandmother Eva in the senior home. Eva accuses Nel of standing by and letting Chicken Little drown all those years ago. We find out that it's true: Nel watched him drown and enjoyed it. She's so upset that she heads to Sula's grave and sadly thinks about how none of the townspeople mourned Sula's death. As she's leaving, she passes Shadrack on the street, who is also lost in sad thoughts. Suddenly, Nel calls out for Sula and finally forgives her for cheating with Jude. She starts crying, for the first time in years. The novel's final line leaves us with the image of a grieving Nel.