In 1910 London, England, Kate Croy (Helena Bonham Carter) lives under the careful watch of her domineering Aunt Maude (Charlotte Rampling). The wealthy Maude has taken the penniless Kate in, intending to marry her to a rich man and save her from the fate which befell her recently deceased mother when she married Kate's own dissolute estranged father, Lionel (Michael Gambon), who swandered most of the family's money to support his drug addiction. Lord Mark (Alex Jennings), a sophisticated aristocrat with a large estate, begins to court Kate with Maude's approval. However Kate is secretly in love with a young muckraking journalist named Merton Densher (Linus Roache), whom her aunt has forbidden her from pursuing a relationship with because of his humble circumstances. Nonetheless she has continued to meet with Merton in secret, though he is growing increasingly impatient for her to leave her aunt and marry him. Aunt Maude confronts Kate about her continuing association with Densher and threatens to withdraw her financial support from Kate and her father. Kate reluctantly breaks with Merton and refuses to meet with him anymore. A few months later, at a dinner party given by her aunt, Kate is introduced to the wealthy American orphan and heiress Milly Theale (Alison Elliott), who is on an extended trip through Europe with her travelling companion Susan Stringham (Elizabeth McGovern). The cynical Kate is captivated by Milly's beauty, vivaciousness and humor, and the two form a strong friendship. Kate and Merton reconcile and resume their secret meetings; one day they run into Milly and Kate introduces Merton as a friend. Soon after Milly invites Kate to accompany her and Susan to Venice. Before leaving town, Lord Mark secretly reveals to Kate that Milly is terminally ill and that although he desires Kate he has to marry Milly to avoid losing his estates. Aware that Milly is indifferent to Lord Mark but is smitten with Merton, Kate invites Merton to Venice and persuades him to show Milly affection in an effort to seduce her. Kate expects that the orphaned and lonely Milly will leave him her fortune after her death. During Kate's, Milly's, and Merton's excursions through Venice, Kate gradually becomes jealous of Milly's attraction to Merton, so much so that she lures him away one night to have sex. Milly confronts her the next morning, though Kate denies that Merton is her lover. She realizes that she must leave, without warning Merton, if her scheme is to succeed. On their own in Venice, Merton's affection for Milly grows ever stronger and the two form a strong bond, even as her condition worsens. One day Merton spots Lord Mark at a cafe; alarmed, he goes to visit Milly but is denied entry. Susan visits him and Merton realizes that Kate has revealed their secret to Lord Mark to sabotage the whole scheme, knowing that Mark would tell Milly as revenge for her jilting him. Nonetheless Milly agrees to see Merton and the two share an intimate moment where she forgives him and says that she still loves both him and Kate, despite their actions. A few days later, Milly dies and Merton and Susan attend her funeral. A few weeks later, Merton returns to London where on one rainy evening Kate comes to Merton's flat. She asks why he has not come to see her in the weeks he has been back and finds a letter from Milly's attorneys, informing Merton that Milly did indeed bequeath a sizable portion of her estate to him. Merton tells Kate that he will not take the money, and she must marry him without it if they are to be together. She agrees, and they make love. But afterwards, Kate asks him to tell her that he is not still in love with Milly, or his memory of her, and he cannot. Kate leaves him for good, knowing that her conniving has backfired. Merton returns to Venice, alone.
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