Dissatisfied with life in her rural Wisconsin home, 18-year-old Caroline "Sister Carrie" Meeber takes the train to Chicago, where her older sister Minnie, and Minnie's husband, Sven Hanson, have agreed to take her in. On the train, Carrie meets Charles Drouet, a traveling salesman, who is attracted to her because of her simple beauty and unspoiled manner. They exchange contact information, but upon discovering the "steady round of toil" and somber atmosphere at her sister's flat, she writes to Drouet and discourages him from calling on her there.
Carrie soon embarks on a quest for work to pay rent to her sister and her husband, and takes a job running a machine in a shoe factory. Before long, however, she is shocked by the coarse manners of both the male and female factory workers, and the physical demands of the job, as well as the squalid factory conditions, begin to take their toll. She also senses Minnie and Sven's disapproval of her interest in Chicago's recreational opportunities, particularly the theater. One day, after an illness that costs her her job, she encounters Drouet on a downtown street. Once again taken by her beauty, and moved by her poverty, he encourages her to dine with him, where, over sirloin and asparagus, he persuades her to leave her sister and move in with him. To press his case, he slips Carrie two ten dollar bills, opening a vista of material possibilities to her. The next day, he rebuffs her feeble attempts to return the money, taking her shopping at a Chicago department store and securing a jacket she covets and some shoes. That night, she writes a good-bye note to Minnie and moves in with Drouet.
Drouet installs her in a much larger apartment, and their relationship intensifies as Minnie dreams about her sister's fall from innocence. She acquires a sophisticated wardrobe and, through his offhand comments about attractive women, sheds her provincial mannerisms, even as she struggles with the moral implications of being a kept woman. By the time Drouet introduces Carrie to George Hurstwood, the manager of Fitzgerald and Moy's – a respectable bar that Drouet describes as a "way-up, swell place" – her material appearance has improved considerably. Hurstwood, unhappy with and distant from his social-climbing wife and children, instantly becomes infatuated with Carrie's youth and beauty, and before long they start an affair, communicating and meeting secretly in the expanding, anonymous city.
One night, Drouet casually agrees to find an actress to play a key role in an amateur theatrical presentation of Augustin Daly's melodrama Under the Gaslight for his local chapter of the Elks. Upon returning home to Carrie, he encourages her to take the part of the heroine. Unknown to Drouet, Carrie long has harbored theatrical ambitions and has a natural aptitude for imitation and expressing pathos. The night of the production – which Hurstwood attends at Drouet's invitation – both men are moved to even greater displays of affection by Carrie's stunning performance.
The next day, the affair is uncovered: Drouet discovers he has been cuckolded, Carrie learns that Hurstwood is married, and Hurstwood's wife Julia learns from acquaintances that Hurstwood has been out driving with another woman and deliberately excluded her from the Elks theatre night. After a night of drinking, and despairing at his wife's financial demands and Carrie's rejection, Hurstwood stumbles upon a large amount of cash in the unlocked safe in Fitzgerald and Moy's offices. In a moment of poor judgment, he succumbs to the temptation to embezzle a large sum of money. Inventing a false pretext of Drouet's sudden illness, he lures Carrie onto a train and escapes with her to Canada. Once they arrive in Montreal, Hurstwood's guilty conscience – and a private eye – induce him to return most of the stolen funds, but he realizes that he cannot return to Chicago. Hurstwood mollifies Carrie by agreeing to marry her, and the couple move to New York City.
In New York, Hurstwood and Carrie rent a flat where they live as George and Carrie Wheeler. Hurstwood buys a minority interest in a saloon and, at first, is able to provide Carrie with a satisfactory – if not lavish – standard of living. The couple grow distant, however, as Hurstwood abandons any pretense of fine manners toward Carrie, and she realizes that Hurstwood no longer is the suave, powerful manager of his Chicago days. Carrie's dissatisfaction only increases when she meets Robert Ames, a bright young scholar from Indiana and her neighbor's cousin, who introduces her to the idea that great art, rather than showy materialism, is worthy of admiration.
After only a few years, the saloon's landlord sells the property and Hurstwood's business partner expresses his intent to terminate the partnership. Too arrogant to accept most of the job opportunities available to him, Hurstwood soon discovers that his savings are running out and urges Carrie to economize, which she finds humiliating and distasteful. As Hurstwood lounges about, overwhelmed by apathy and foolishly gambling away most of his savings, Carrie turns to New York's theaters for employment and becomes a chorus girl. Once again, her aptitude for theatre serves her well, and, as the rapidly aging Hurstwood declines into obscurity, Carrie begins to rise from chorus girl to small speaking roles, and establishes a friendship with another chorus girl, Lola Osborne, who begins to urge Carrie to move in with her. In a final attempt to prove himself useful, Hurstwood becomes a scab, driving a Brooklyn streetcar during a streetcar operator's strike. His ill-fated venture, which lasts only two days, prompts Carrie to leave him; in her farewell note, she encloses twenty dollars.
Hurstwood ultimately joins the homeless of New York, taking odd jobs, falling ill with pneumonia, and finally becoming a beggar. Reduced to standing in line for bread and charity, he commits suicide in a flophouse. Meanwhile, Carrie achieves stardom, but finds that money and fame do not satisfy her longings or bring her happiness and that nothing will.