The events described in the novel take place in the 1850s in England. A young painter from London, Walter Hartright, secures a position as an art teacher at Limmeridge House in Cumberland, which belongs to Frederick Fairlie. On a hot summer night prior to his departure, Walter meets a very strange woman on the empty street, who is dressed in a completely white dress. The woman in white shows a sudden agitation when Walter explains about his new job, but also speaks with love about Mrs. Fairlie, the late owner of Limmeridge House. Walter helps the strange woman to catch a cab, only to encounter two men looking for a “woman in white," who has escaped from a mental asylum.
Upon his arrival at Limmeridge, Walter meets those residing there: Marian Halcombe, a daughter of the late Mrs. Fairlie from her first marriage, her sister Laura Fairlie, and Laura’s bachelor uncle, Frederick Fairlie. Walter tells Marian about the strange woman he met in London. Intrigued, Marian finds mention of a girl named Anne Catherick in her mother’s letters. Mrs. Fairlie became attached to the little Anne because of her resemblance to Laura, and Anne in her turn became attached to Mrs. Fairlie. Meanwhile, Laura and Walter fall in love, but Walter is devastated to learn that Laura is already engaged to Sir Percival Glyde, the owner of Blackwater Park in Hampshire, a wealthy and respected person. The engagement was arranged at the request of Laura's father prior to his death, and she therefore considers herself bound to honor it, despite her love for Walter, and increasing sinister hints about Sir Percival, which suggest he had some connection to Anne Catherick, and may have been responsible for placing her in the asylum. Because of his grief and love for Laura, Walter leaves Limmeridge and departs for Central America.
Sir Percival manages to provide explanations for everything concerning Anne, but shows suspicious behavior and also arranges for a marriage contract which benefits him economically and disadvantages Laura. Both Marian and Laura are increasingly upset by the prospect of the marriage, but it takes place anyways, and Laura and Sir Percival depart for their honeymoon in Italy. They are absent for six months, and then return to reside at Blackwater Park, where Marian joins them in order to live as a companion with Laura. The couple returns with Sir Percival's friend, the Italian Count Fosco, who is a sinister character, and his wife Eleanor, who is Laura's aunt, and who seems to be completely under his spell. It becomes clear that Sir Percival is an abusive and controlling husband, and also that he is in bad financial situation and desperate to gain access to his wife's money. Count Fosco seems to be Percival's advisor and helper, and the Countess is also willing to spy and intercept letters, so that Laura and Marian become increasingly isolated and helpless. Laura meets Anne, who tries to caution her and refers to a secret about Sir Percival, but once Sir Percival learns of this meeting, he becomes even more abusive and obsessive, convinced that Anne has told Laura a secret that he is desperate to hide.
Marian is sure that Fosco and Percival are conspiring against Laura, and perhaps even threatening her life, but before she can do anything, she becomes seriously ill. With Marian incapacitated, Fosco and Percival launch their terrible plan: they trick Laura into believing Marian has left the house, thereby luring Laura to London where she thinks she is following her sister. According to the story as Fosco and Percival will tell it, Laura becomes suddenly ill and dies in London. At about the same time, Anne Catherick is apparently found and returned to the asylum. As Marian recovers, she is convinced there must be more to the story, and goes to the asylum to visit Anne. She is shocked to discover that the woman in the asylum is actually Laura, and helps her to escape. The two women hide out in secret, and eventually cross paths with Walter, who has returned to England, and is overjoyed to learn that Laura is not dead after all.
Walter is determined to see Laura's rightful identity re-established so that she can reclaim her fortune and property, and so that Fosco and Percival will be punished. Walter's investigations lead to him uncovering that Percival is actually illegitimate, and therefore has no legal right to his title, possessions, or land. Percival has forged records of his parents’ marriage in the church register, and Mrs. Catherick (Anne's mother) knows of his secret. As a result, Percival has always been terrified that either Mrs. Catherick or Anne (who he falsely assumes is also aware of his illegitimacy) will reveal his secret, and this fear led him to have Anne declared mad and placed in the asylum. Percival becomes increasingly alarmed that Walter will uncover and reveal the truth about his identity, and attempts to burn the incriminating documents, but dies in the resulting fire.
Percival's death, however, does not re-establish Laura's identity. Proof of that rests on confirmation of the date on which Laura arrived in London, as that date precedes the death of Anne. Walter is still determined to get Fosco to substantiate this timeline, even though he knows it is dangerous to antagonize him. His investigations lead to the revelation that Anne was the illegitimate daughter of Laura's father, and thus they are half sisters, which explains the strong resemblance between them. In order to better protect her, Walter and Laura marry, and Walter enlists the help of Pesca.
Walter and his old friend, Professor Pesca, cross paths with Fosco, and Walter notes with interest that Fosco seems terrified. He is able to discover that both Fosco and Pesca are members of an Italian secret society, which Fosco has betrayed. As a result, he lives in constant fear of retribution. Walter uses this to his advantage and forces Fosco to write out a confession of the fraud in exchange for the opportunity to flee. With this confession, Laura's identity is restored and in death, Anne Catherick finally finds peace, buried along with her beloved Mrs. Fairlie.
A short time later, Laura gives birth to a son. While traveling abroad, Walter learns that Fosco has died, and realizes that the secret society tracked him down and had him killed. With the final link to the conspiracy against Laura finally resolved, he returns home to learn that Frederick Fairlie has also died, and that Laura now owns Limmeridge house, which will someday be inherited by their son.
