The novel opens in 1846 at Combe-Raven, a country estate in Somersetshire, where the Vanstone family lives in comfortable prosperity. Andrew Vanstone is a generous gentleman of about fifty; his wife is a graceful woman of forty-four in fragile health. Their elder daughter, Norah, twenty-six, is quiet and reserved, while the younger, Magdalen, eighteen, is strikingly beautiful, impulsive, and gifted with extraordinary talent for mimicry. Miss Garth, the loyal governess of 12 years, manages the household.
The family's peace shatters when a letter from New Orleans distresses Mr. Vanstone. He and his wife depart abruptly for London on unexplained "family business." Mrs. Vanstone writes to Miss Garth claiming the journey concerned a late-in-life pregnancy, but Miss Garth suspects this is incomplete. A shabby stranger named Captain Wragge also appears, claiming a family connection; he is a habitual swindler whom Mrs. Vanstone has paid off for years.
After the parents return, Magdalen grows close to Frank Clare, the handsome but weak-willed twenty-year-old son of their reclusive neighbor. When a position is arranged for Frank with a London firm that may send him to China, Magdalen confesses her love to her father and begs him not to let Frank go. Mr. Vanstone agrees to a year's engagement, promising Magdalen's dowry will fund Frank's partnership. During a visit to Frank's father, the elder Clare inadvertently reveals that Mr. Vanstone's recent marriage has rendered his will void, leaving his daughters unprotected.
Panicked, Mr. Vanstone writes to his solicitor, Mr. Pendril, begging him to draft a new will. Before Pendril arrives, Mr. Vanstone is killed in a railway accident. Mrs. Vanstone collapses, goes into premature labor, and dies the following day; her newborn survives only hours. Magdalen's grief is compounded by guilt: Her father was traveling that day because her engagement had displaced his original schedule.
Pendril reveals the full catastrophe. Andrew Vanstone had rashly married a worthless woman in Canada as a young man. Though they separated, the marriage remained legally binding, and he lived with the woman known as Mrs. Vanstone for nearly thirty years in every appearance of wedlock. When the first wife died, the New Orleans letter brought the news, and the couple married legally at last. Because Norah and Magdalen were born before this marriage, they are illegitimate and have no legal claim to their father's estate. The old will is void, and no new one exists. The fortune of over eighty thousand pounds passes through the briefly surviving infant, the only child born in lawful wedlock, to the next of kin: Andrew's estranged elder brother, Michael Vanstone.
Michael, who has not spoken to Andrew in thirty years, offers each sister a contemptuous one hundred pounds, characterizing them as illegitimate outcasts deserving nothing. Both refuse. Miss Garth takes the girls to her elder sister's school in London, while Magdalen makes a fierce promise at her parents' grave.
Weeks later, Magdalen vanishes, leaving a note begging Norah not to search for her. Captain Wragge finds her alone in York, where she sought help from a stage manager she met during amateur theatricals. Wragge offers shelter with his wife, the towering and simple-minded Mrs. Wragge, and Magdalen agrees to place herself under his management.
Wragge devises a one-woman theatrical entertainment that tours England successfully. He also investigates Michael Vanstone's household for Magdalen. Before she can act, Michael dies, and his son Noel Vanstone, a frail, vain, and miserly man, inherits everything. Noel's formidable Swiss housekeeper, Mrs. Lecount, guards him fiercely. After Magdalen's letters to Noel are rejected at Mrs. Lecount's direction, Magdalen visits Noel's London house disguised as Miss Garth, wearing a grey wig and padded cloak. She fails to move Noel, and Mrs. Lecount secretly cuts a fragment from Magdalen's dress as evidence.
Magdalen conceives the plan to marry Noel and reclaim her father's fortune. Wragge traces Noel to Aldborough, Suffolk, and they settle nearby under the name Bygrave: Wragge as the uncle, Magdalen as the niece, and Mrs. Wragge as an invalid aunt. While Magdalen charms Noel, Mrs. Lecount fights back, obtaining a physical description of Magdalen from Miss Garth that includes two distinctive moles on her neck. Wragge counters by painting over the moles with theatrical cosmetics. Mrs. Lecount also infiltrates the Bygrave house and tricks Mrs. Wragge into revealing information that confirms her suspicions about Magdalen's identity. A letter from Frank in China breaks off his engagement to Magdalen with self-pitying excuses, destroying her last scruple and committing her irrevocably to the marriage.
To remove Mrs. Lecount, Wragge forges a letter from her brother's doctor announcing a relapse in Zurich. The housekeeper departs, though not before posting a warning letter to Noel about Magdalen's true identity. As part of the scheme, Noel has been sent to stay at St. Crux-in-the-Marsh, the estate of Admiral Bartram, an old family friend. Wragge retrieves Noel and obtains the marriage license before the warning can reach him.
On the wedding morning, Magdalen stands at the altar pale and composed. Mrs. Wragge clings to her in tears at the parting. In Zurich, Mrs. Lecount discovers the forgery and races back to England.
The marriage is deeply unhappy. Magdalen secures a will from Noel leaving her exactly eighty thousand pounds. But Mrs. Lecount tracks Noel to his cottage near Dumfries, matches the fabric fragment to a dress in Magdalen's wardrobe, and proves his wife's true identity. Terrified, Noel allows Mrs. Lecount to dictate a new will leaving everything to Admiral Bartram, accompanied by a sealed Secret Trust. The Trust directs the admiral to pass the fortune to his nephew George Bartram if George marries within six months; otherwise, the money goes to George's sister, Mrs. Girdlestone. That night, Noel dies of heart failure.
Magdalen's lawyer suspects the Trust exists but cannot prove it. Desperate, she disguises herself as a parlor-maid and enters service at St. Crux under a false name. One night she witnesses the admiral sleepwalking, carrying the Trust between hiding places. She steals his keys and opens the bureau, but old Mazey, the admiral's devoted servant, catches her. He lets her leave rather than report her.
The admiral dies shortly after, and a search of his papers fails to locate the Trust. Magdalen sinks into poverty in London, her health shattered. Robert Kirke, a merchant sea captain who once glimpsed her at Aldborough and has been haunted by the memory, finds her collapsed in squalid lodgings and nurses her through weeks of dangerous illness.
During Magdalen's recovery, Norah writes to say she has married George Bartram. While visiting St. Crux with Miss Garth, Norah discovers the crumpled Trust in the ashes of a great metal tripod in the Banqueting Hall, where the sleepwalking admiral had unknowingly deposited it. Because George does not marry within six months and Mrs. Girdlestone dies, the fortune reverts and is divided: Half goes to George and Norah, and the other half belongs to Magdalen as Noel's widow. Magdalen tears the Trust to pieces, refusing to claim anything through her past schemes. She will accept her share only as a gift from her sister, on honest terms.
Magdalen insists on writing Kirke the complete story of her life before accepting his love. When she returns from the seaside a month later, she asks what he thinks of her. He answers with a kiss, and the novel closes with the promise of their marriage and the redemption of Magdalen's long struggle.