This is the story of Elinor and Marianne Dashwood, sisters who respectively represent the "sense" and "sensibility" of the title. With their mother, their sister Margaret, and their stepbrother John, they make up the Dashwood family.
Henry Dashwood, their father, has just died. Norland Park, his estate, is inherited by John; to his chagrin, Henry has nothing but ten thousand pounds to leave to his wife and daughters. On his deathbed, he urges John to provide for them and John promises that he will do so. He is already wealthy because he has a fortune from his mother and is also married to the wealthy Fanny Ferrars.
Immediately after Henry's burial, the insensitive Mrs. Dashwood moves into Norland Park and cleverly persuades John not to make any provision for his stepmother and stepsisters. Mrs. Henry Dashwood, disliking Fanny, wants to leave Norland Park at once, but Elinor prudently restrains her until they can find a house within their means.
Edward Ferrars, Fanny's brother, comes to stay and is attracted to Elinor. Mrs. Dashwood and Marianne expect an engagement, but Elinor is not so sure; she knows that Mrs. Ferrars and Fanny will object to Edward's interest in her. Fanny takes exception to Edward's fondness for Elinor and is so rude that Mrs. Dashwood at once rents a cottage fortuitously offered to her by her cousin, Sir John Middleton.
The Dashwoods move to Barton Cottage and are met by Sir John, who does all in his power to make them comfortable. They soon meet his elegant but insipid wife and their four children.
One day, when Marianne and Margaret are walking on the downs, Marianne sprains her ankle. She is carried home by a stranger, John Willoughby, who is staying at Allenham Court, a country estate which he will inherit after the death of its elderly owner, Mrs. Smith. Marianne and Willoughby fall in love and are inseparable. But after a short time, Willoughby leaves unexpectedly for London without explaining or declaring himself.
Edward Ferrars soon pays a visit to Barton Cottage. But he is distraught and gloomy, and Elinor is puzzled by his reserve.
Lady Middleton's mother, Mrs. Jennings, has been staying at Barton Park. She teases Marianne about Colonel Brandon, a friend of Sir Henry, who obviously admires Marianne. Though she likes the colonel, Mrs. Jennings repeats some scandal about him; he is said to have an illegitimate daughter, Miss Williams.
Lady Middleton's younger sister, Charlotte Palmer, and her husband visit Barton Park. When they leave, Sir John invites the Misses Steele, two young ladies whom he has met in Exeter and has found to be connections of Mrs. Jennings.
Lucy confides to Elinor that she has been secretly engaged to Edward Ferrars for four years. He was tutored by her uncle and became well acquainted with Lucy and Anne at that time. Elinor is shocked but concludes that Edward had a youthful infatuation for Lucy. Lucy persists in asking for advice and begs Elinor to persuade her brother John to give Edward the Barton living if he decides to take orders.
Mrs. Jennings invites Elinor and Marianne to stay with her in London. Marianne is eager to go because she hopes to see Willoughby there. He has not been back to visit them, nor has he written to Marianne.
In London, Marianne waits for a visit from Willoughby. She writes him several times but receives no reply. One day he leaves his card but never calls personally.
Finally, Elinor and Marianne see Willoughby at a dance with a fashionable heiress, Miss Grey. He speaks curtly to Marianne, who is distracted by his coldness. She writes him for an explanation, and he returns her letters with a cruel note, denying that he had ever been especially interested in her and announcing his engagement to Miss Grey.
Colonel Brandon, who is also in London, is distressed by Willoughby's conduct to Marianne and tells Elinor his own story. As a young man, he had loved his cousin Eliza, his father's ward. But to gain Eliza's fortune, his father had married her to his eldest son, who had treated her badly. Years later, the colonel discovered that Eliza had left her husband for another man. She had sunk lower and lower, and was now penniless and on her deathbed. The colonel did all he could for her and promised to bring up her daughter, also named Eliza. Eliza, now grown, had been seduced by Willoughby, who had deserted her. The colonel had fought a duel with Willoughby, but neither had been injured.
John Dashwood and his wife come to London for the season. He meets his sisters and is introduced to the Middletons, whom he finds very congenial. Anne and Lucy Steele are invited to stay with the Middletons and eventually pay a visit to the Dashwoods, John and Fanny. They are treated so kindly that Anne feels it is safe to break the secret of Lucy's engagement to Edward.
Fanny Dashwood has hysterics and orders Lucy and Anne out of her house. Edward's mother disinherits him because he will not break his word to Lucy. He decides to take orders and offers to free Lucy from her engagement, but Lucy will not give him up.
Charlotte Palmer's son is born, and she invites Elinor and Marianne to accompany her mother on a visit to her country house, Cleveland. Marianne falls ill there and seems near death. Colonel Brandon is also staying at Cleveland and offers to fetch Mrs. Dashwood.
The Palmers leave their house, fearing infection for the baby, and while Elinor awaits her mother's arrival, she is amazed by a visit from Willoughby. He has heard of Marianne's illness and has come to get news of her. He tells Elinor how bitterly he repents of his conduct and how wretched his wife has made him; it was she who dictated the cruel note which he sent to Marianne. Elinor is sorry for him.
Marianne recovers and the family returns to Barton Cottage. Eventually, Elinor tells Marianne about Willoughby's repentant visit. Marianne is now sorry that the family has suffered on her behalf.
One day, a servant tells them that Edward Ferrars is married. Elinor tries to put him out of her mind; however, he arrives at Barton Cottage and explains that Lucy did not marry him; instead, she eloped with his brother, Robert.
Everything ends happily. Edward is reconciled to his mother and marries Elinor. He takes orders and is given the living at Delaford, Colonel Brandon's estate. Eventually Marianne agrees to marry the colonel, and the two couples live happily, close in distance and in friendship.