Madame Emery and her daughter Geneviève (Deneuve) sell umbrellas at their little boutique in the coastal town of Cherbourg in Normandy, France. Geneviève is in love with Guy (Castelnuovo), a handsome young auto mechanic who lives with and cares for his sickly aunt and godmother Elise along with her quiet, dedicated, care-giver, Madeleine (Ellen Farner), a young woman who clearly loves Guy. Subsequently, though, Guy is drafted, and must leave to fight in the Algerian War.
The night before he leaves, he and Geneviève make love. She becomes pregnant, and feels abandoned, as he does not write often. At her mother's insistence, she marries thirtyish Roland Cassard (Marc Michel), a quietly handsome Parisian jeweler who falls in love with Geneviève and is willing to wed her, even though she is carrying another man's child (Cassard had previously wooed the title character in Lola, only to be rejected once the father of her child returned; he relates an edited version of this story to Madame Emery with ill-concealed bitterness). The society wedding in a great cathedral shows Geneviève's upward social and economic movement, but she does not seem at all happy with her situation, and clearly feels trapped.
When Guy returns with a leg injury, he learns that Geneviève has married and left Cherbourg, and that the umbrella store is gone. He attempts to ease back into his old life, but becomes rebellious due both to the war and to the loss of Geneviève. One day, Guy quits his job after an argument with his boss, and spends a night and a day drinking excessively in seedy port bars. He winds up sleeping with a prostitute named Jenny, whose real name turns out to be also Geneviève.
When he returns to his apartment, Madeleine tells him tearfully that his godmother has died. He sees that Madeleine loves him, and cleans up his life with her encouragement. With an inheritance from his aunt, he is able to finance to own a new "American-style" Esso gas station. He asks Madeleine to marry him, and she accepts, though she wonders if he is asking her from despair at Geneviève's actions.
The coda is set in December 1963, approximately five years after the earliest events. Guy is now managing the couple's Esso station. He's with his now upbeat and loving wife Madeleine and their little son François. It is Christmas Eve. Madeleine and François go for a short walk, leaving Guy briefly, after which a new Mercedes pulls in to the station. The mink-clad driver turns out to be a sophisticated, visibly wealthy Geneviève, accompanied by her (and Guy's) daughter Françoise, who remains in the car.
At first shocked to see each other, they go inside the station to talk, and Geneviève explains this is the first time she has returned to Cherbourg since her marriage. Her fairly young mother is now dead. Her rich husband and child are the only family she has left. She has evidently had no children by Cassard, and she makes no mention of him. The two converse while Geneviève's car is being filled with gas, and Geneviève asks Guy if he wants to meet their daughter. Without comment, and little reflection, he answers "no", and this leads to their exchanging their final goodbyes. As the film ends, Guy greets his wife with a kiss and plays with his son.