In 1977, Harry Burns and Sally Albright graduate from the University of Chicago and share the drive to New York City, where she is beginning journalism school and he is starting a career. Harry has been dating Sally's friend Amanda Reese.

During the drive, Harry and Sally discuss their differing ideas about relationships; she disagrees with his assertion that men and women cannot be friends as "the sex part gets in the way". At a diner, Harry tells Sally she is very attractive, and she angrily accuses him of making a pass at her. They part in New York on unfriendly terms.

Five years later in 1982, Harry and Sally find themselves on the same flight. It turns out Sally is dating Harry's neighbor Joe, and Harry is engaged to a woman named Helen, which surprises her, as it seems uncharacteristically optimistic of him. Harry suggests they become friends, forcing him to qualify his previous position about the impossibility of male-female friendships. They separate, concluding that they will not be friends.

Five years later in 1987, Harry and Sally run into each other again in a bookstore. They have coffee and talk about their previous relationships; Sally and Joe broke up because she wanted a family and he did not want to marry, and Helen left Harry for another man. They take a walk and agree to pursue a friendship. They have late-night phone conversations, go to dinner, and spend time together discussing their love-lives.

During a New Year's Eve party, Harry and Sally find themselves attracted to each other, even sharing a quick kiss as a New Year's formality. Even though they remain friends, they set each other up with their respective best friends, Marie and Jess. When the four go to a restaurant, Marie and Jess quickly fall for each other and later become engaged.

One night while talking on the phone, Sally tearfully tells Harry that her ex is getting married. He goes to her apartment to comfort her and in Sally's vulnerable state, they begin kissing and have sex. Harry leaves the next morning, feeling awkward and filled with regret. Their friendship cools until they have a heated argument at Jess and Marie's wedding dinner in which Sally angrily slaps Harry. He attempts to mend their friendship, but Sally feels that they cannot be friends.

At a 1988 New Year's Eve party, Sally feels lonely without Harry. He starts to spend New Year's alone, watching Dick Clark's 16th annual New Year's Rockin' Eve. Before midnight, he walks around the city. As Sally decides to leave the party before midnight, Harry appears and declares his love for her. She argues that the only reason he is there is that he is lonely, but he lists the many things he loves about her. They then have a New Year's midnight kiss. Harry and Sally marry three months later, exactly 12 years and three months after their first meeting.

The film contains several interspersed segments of older couples discussing how they met. The true stories, gathered by Nora Ephron, are narrated by actors. The final couple interviewed, before the closing credits, is Harry and Sally.