Set in 1900, the novel depicts the lives of several students and staff members at Appleyard College, a fictional, all-female boarding school in Macedon, Australia. The story begins on Valentine's Day as the class travels to Hanging Rock, a well-known rock formation. The trip is arranged and led by the school's headmistress, Mrs. Appleyard. The group arrives at Hanging Rock and four girls break from the trip to explore the rocks.
The four girls are Miranda, Marion, Irma, and Edith, who are individually known as being, respectively, popular, brilliant, beautiful, and unremarkable. Miranda, their de facto leader, compels them to head further up into the rocks. There, they find a strange hole, surrounded by a semicircle of small rocks, that looks down onto the campgrounds. Unbeknownst to them, the girls are followed by their mathematics teacher, Miss McCraw. They doze off and later in the day, Edith sees the other three girls heading towards a monolith above them. She calls out to them, but they appear unable to hear her, and seem caught in a mystical trance.
Edith reappears later, in a daze. She says the other girls are gone and that she saw Miss McGraw ascending the rocks in her underwear. The members of the trip comb the rocks looking for the three girls and their teacher, but find nothing. A police investigation proves similarly fruitless. The story becomes a local news sensation, as various newspapers speculate about gruesome possible explanations for their disappearance. Students, staff, and various townspeople attempt to solve the mystery of what happened that afternoon.
One day, Mike Fitzhurbert, a picnicker who saw the girls just before they went up to the rock, undertakes his own sweep of the rocks. He enters a strange fugue state after this and is discovered by his friend, Albert Crundall, lying on a rock. Subsequently, he finds an unconscious Irma, who is largely unharmed, save for a few cuts and bruises. He recuperates for several days after the incident and has incoherent memories of his trip. Irma is taken away from the school by her wealthy father, who feels that the school is clearly unfit for her. Mrs. Appleyard views this as a major blow to the institution as she relied heavily on his donations.
The school suffers from bad press. Various staff members quit their jobs as the school's enrollment rapidly dwindles. The school's French instructor Dianne de Poitiers, handyman Tom, and maid Minnie all leave the school, much to Mrs. Appleyard's consternation. Mrs. Appleyard struggles to hold the school together, as she becomes increasingly panicked about its dwindling financial resources. One of the governesses, Dora Lumley, also departs from the college, accompanied by her brother, Reg. They then die suddenly in a hotel fire on their way home.
Following the upheaval at school, one of the students, Sara, disappears for several days. She is later found directly beneath the bell tower of the college, her head crushed but her body bizarrely undamaged. Profoundly affected by the events of the past few weeks, Mrs. Appleyard travels to Hanging Rock, throws herself off the rocks, and is impaled.
A brief note, claiming to be pulled from a 1913 newspaper clipping, explaining that the happenings at Hanging Rock were never solved and the girls, though presumed dead, were never found. Following the suicides of Sara and Mrs. Appleyard, the case was closed. The narrator notes that the tragedy continued to be spoken of for many years after the fact.
