The film follows a few years in the lives of Esther Blodgett (Gaynor), a promising young Hollywood starlet known to her fans as "Vicki Lester", and Norman Maine (March), the older, alcoholic actor who started Esther's career as his own career was fading. Vicki Lester rises to international fame and popularity while Maine sinks into obscurity and suicide.

The story begins in rural North Dakota, where Esther is a teenage girl determined to become a Hollywood actress. Although her aunt sternly discourages such thoughts, Esther's grandmother encourages her to pursue her dream and gives her money to finance her efforts. Esther goes to Hollywood and begins seeking small parts as an actress.

At first, Esther is unable to find any acting work at all. Many other young women are applying for the same parts, and Esther is told that her chances of success are one in 100,000. However, one of her neighbors is an assistant director who helps her land a one-time waitressing job at a party for Hollywood film professionals. While working at the party, Esther catches the eye of Norman Maine, a famous actor whom she admires, and they begin a romance. Esther wins an acting contract after Maine persuades his producer Oliver Niles (Menjou) to give her a screen test, and she is given the screen name "Vicki Lester". When the studio has trouble finding a female lead for Maine's current film, entitled The Enchanted Hour, Niles follows Maine's advice to give the role to Esther. This film makes Vicki Lester an overnight success, even as viewers continue to lose interest in Maine.

The release of The Enchanted Hour is soon followed by Esther and Norman's elopement and a comical trailer-camping honeymoon in the mountains. When they return to filmmaking, Vicki Lester continues to flourish as Norman repeatedly encounters signs that his own career is over. After a stay at a sanatorium fails to cure Norman's increasingly disruptive alcoholism, Esther decides to quit acting in order to be with him. However, Norman overhears her discussing this plan and drowns himself in the Pacific Ocean. Soon afterward, Esther's grandmother comes to visit Esther and convinces her to continue her career. The film ends with Esther and her grandmother making speeches during Vicki Lester's foot- and handprint ceremony at Grauman's Chinese Theatre, announcing herself as Mrs. Norman Maine.

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