In Regency-era England, wealthy and beautiful Emma Woodhouse lives with her father and is often visited by Mr Knightley, a local landowner who is the brother of her sister's husband. She searches for a new companion after her governess, Miss Taylor, marries and becomes Mrs. Weston. Emma settles on Harriet Smith, a younger girl who Emma supposes is the unclaimed child of a gentleman; Harriet's parents are unknown, but her education has been provided for. Emma learns that Mr. Robert Martin, a tenant farmer of Mr. Knightley, has proposed to Harriet. Though claiming she will not interfere, Emma manipulates Harriet into declining Mr. Martin's offer of marriage, much to Harriet's distress. Emma believes that Mr. Elton, the local vicar, is in love with Harriet and encourages Harriet to transfer her hopes to him, despite Mr. Knightley's warning that she should not involve herself in the situation.

At Christmas time, Emma's older sister and Mr. Knightley's younger brother come to visit. After everyone leaves dinner with the Westons early, Emma finds herself alone in a carriage with Mr. Elton, who declares his love for her. Emma promptly refuses him, and Mr. Elton disappears for six weeks, eventually returning with a wife. Two much-talked-about relations of Highbury residents appear: Jane Fairfax, the niece of Miss Bates, and Frank Churchill, Mr. Weston's son from his first marriage. Emma grows jealous of Jane but is entranced by Frank.

Frank's arrival prompts the Westons to hold a ball, where Mr. Elton embarrasses Harriet by pointedly refusing to dance with her. She is rescued by Mr. Knightley, who asks her to dance. Emma and Mr. Knightley also dance together, awakening romantic feelings between them. Though Emma leaves before Mr. Knightley can speak to her, he runs to her home only for their meeting to be interrupted by Frank, who has rescued Harriet after being set upon by Romanichal Travellers. Harriet intimates to Emma that she has fallen in love again, leading Emma to believe Harriet is in love with Frank. Emma again vows not to interfere but manipulates circumstances so that Harriet and Frank may spend more time together.

Emma tries to spend more time with Mr. Knightley and is surprised when he repeatedly ignores her. On a picnic with their entire party of social acquaintances, Frank urges them to play a game to amuse Emma, who unthinkingly insults Miss Bates, leading the party to disband in discomfort. Mr. Knightley rebukes Emma for her behaviour, and a humiliated Emma apologizes to Miss Bates, who accepts her apology without question.

Frank Churchill's wealthy aunt dies, and he is no longer required to be at her beck and call. The Westons reveal he was secretly engaged to Jane Fairfax and waiting for his aunt, who opposed the match, to die. The Westons had hoped he would marry Emma, but Emma is only distressed on account of Harriet. Emma breaks the news to Harriet, who reveals that she is actually in love with Mr. Knightley. Harriet realizes that Emma herself is in love with Mr. Knightley.