The story is told in three main arcs, with almost all of it occurring during a 12-month period beginning and ending at Thanksgiving parties hosted by Hannah (Mia Farrow) and her husband, Elliot (Michael Caine). Hannah serves as the stalwart hub of the narrative; her own story as a successful actress (a recent success as Nora in A Doll's House) is somewhat secondary, but most of the events of the film connect to her. An adulterous romance between Elliot and one of Hannah's sisters, Lee (Barbara Hershey), provides the main romantic entanglement of the film. Elliot's discontent with his wife's self-sufficiency and resentment of her emotional strength causes him to look elsewhere.
Lee has lived for five years with a reclusive artist, Frederick (Max von Sydow). She finds her relationship with Frederick no longer intellectually or sexually stimulating, in spite of (or maybe because of) Frederick's professed interest in continuing to teach her. She leaves Frederick, much to his sorrow (for he has grown dependent upon her), and has a secret affair with Elliot lasting for several months. Mickey, another of Allen's neurotic characters, provides the comic relief. Parts of his story are scenes from his previous marriage to Hannah and his horrible date with the cocaine-addicted Holly (Hannah's other sister, played by Wiest), shown in flashbacks. Mickey's main story is one of a hypochondriac confronting the possibility of an actual serious disease. After a clean bill of health, it turns into a career-pausing existential crisis, and leads to unsatisfying experiments with religious conversion to Catholicism and Krishna Consciousness, before a long walk and the fortuitous opportunity to see again the Marx Brothers' Duck Soup (part of the 'joyous' declaration of war sequence is featured) help to remind him why life is worth living.
The revelation helps prepare him for a second date with Holly, which this time blossoms quickly (and mostly off-screen) into a relationship and marriage. Holly's story is the film's third main arc. She's an unsuccessful actress who dabbles in a catering business, funded by Hannah, but competing with April (Carrie Fisher), her business partner and a fellow actress for acting parts and a man (Sam Waterston) ends with Holly losing both. She decides to try her hand at writing. The career change forces her once again to borrow money from Hannah, a dependency Hannah perhaps welcomes and Holly resents. After writing a script inspired by Hannah and Elliot (a story that Holly sets aside after Hannah objects to just how much of the couple's private life Holly had incorporated into it), she writes a story inspired by her own life, which Mickey reads and admires greatly, vowing to help her get it produced. A minor arc in the film tells part of the story of Norma and Evan (played by Maureen O'Sullivan and Lloyd Nolan, who were both in Never Too Late 20 years earlier). They are Hannah's parents, who still have acting careers of their own, careers disrupted at times by Norma's alcoholism.
Evan's flirtation and piano playing provide part of the entertainment during the Thanksgiving get-togethers. By the time of the film's second Thanksgiving Lee has ended her affair with Elliot. In a final coda-like act, another year has elapsed and the film ends happily for the three sisters, now all married, and infertile Mickey has somehow impregnated his new wife Holly. Part of the film's structure and background is borrowed from Ingmar Bergman's Fanny and Alexander. In both films, a large theatrical family gather for three successive year's celebrations (Thanksgiving in Allen's film, Christmas in Bergman's). The first of each gathering is in a time of contentment, the second in a time of trouble, and the third after the resolution of the troubles. The sudden appearance of Holly's reflection behind Mickey's in the closing scene also parallels the apparition behind Alexander of the Bishop's ghost.