In 1922 New York City, Millie Dillmount and Miss Dorothy Brown are just two of the girls living at the Priscilla Hotel for Single Young Ladies run by Mrs. Meers. Orphaned, Miss Dorothy, just recently arrived, is a naive, old-fashioned girl from a seemingly privileged background who has aspirations to be a stage actress. From more modest means, Millie, in New York for three months, used to be old fashioned, but now has a new modern sensibility and look to match, complete with bobbed hair and dresses with hemlines above the knee. Included in this new modern sensibility is Millie's goal of getting a job as a stenographer, with a quick promotion to being her wealthy boss' "Mrs.". Love is not to factor into the equation. She believes she's found the right employer in the form of chisel-jawed Trevor Graydon of the Sincere Trust Insurance Company. Millie's pursuit of Mr. Graydon is despite the fact that Mr. Graydon sees her as one of the boys, he has old fashioned sensibilities, and Millie .


The film is set early in the flapper era, beginning on "Thursday", June 2 of 1922, although in fact this day was a Friday. Millie Dillmount's (Julie Andrews) ambition is to find work as a stenographer to a wealthy businessman and then marry him – a "thoroughly modern" goal. Millie befriends Miss Dorothy Brown (Mary Tyler Moore) as the latter checks into the Priscilla Hotel. When house mother Mrs. Meers (Beatrice Lillie) learns Miss Dorothy is an orphan, she remarks, "Sad to be all alone in the world." Unbeknownst to Millie, the woman is selling her tenants into white slavery, and those without family or close friends are her primary targets.
At a friendship dance in the hall, Millie meets the devil-may-care paper clip salesman Jimmy Smith (James Fox), to whom she takes an instant liking. However, she carries on with her plan to work for and then marry a rich man, and when she gets a job at Sincere Trust, she sets her sights on the attractive but self-absorbed Trevor Graydon (John Gavin). Jimmy later takes her and Miss Dorothy on an outing to Long Island, where they meet eccentric widow Muzzy Van Hossmere (Carol Channing). Jimmy tells the girls that his father was Muzzy’s former gardener.
Although Millie is falling in love with Jimmy, she is determined to stick to her plan and marry Trevor. One morning, she goes to work dressed as a flapper and attempts to seduce him, but her effort fails. Eventually, Trevor sees Miss Dorothy and falls in love with her and vice versa, leaving Millie heartbroken.
Meanwhile, Jimmy's attempts to talk to Millie are continually thwarted by no-nonsense head stenographer Miss Flannary (Cavada Humphrey). He eventually climbs up the side of the building and when he finally gets to talk to Millie, she tells him she is quitting her job since Mr. Graydon is no longer available.
Mrs. Meers makes several attempts to kidnap Miss Dorothy and hand her over to her Asian henchmen Bun Foo (Pat Morita) and Ching Ho (Jack Soo), but Millie manages to interrupt her every time. When Mrs. Meers finally succeeds, Millie finds Trevor drowning his sorrows, and he tells her Miss Dorothy stood him up and checked out of the hotel. Jimmy climbs into Miss Dorothy's room and lets Millie in, and they find all of Miss Dorothy's possessions still there. Millie realizes Miss Dorothy is just one of several girls who have vanished without a word to anyone, except to Mrs. Meers. Together with Trevor Graydon, they try to piece the puzzle together. When Jimmy asks what all the missing girls had in common, Millie mentions that they all were orphans.
Jimmy disguises himself as a woman named Mary James seeking accommodations at the Priscilla Hotel, and casually mentions she is an orphan in front of Mrs. Meers. Mrs. Meers spots Trevor sitting in his car in front of the hotel, becomes suspicious, and shoots him with a tranquilizer dart. Mary James is subsequently captured by Mrs. Meers and Bun Foo, and Millie follows them to Chinatown, where the unconscious Jimmy has been hidden in a room in a fireworks factory where Miss Dorothy is sleeping. Trying to look casual, Millie has been smoking a cigarette outside the building, and when she begins to choke on it, she tosses it into a window, setting off the fireworks. As a series of explosions tear through the building, Millie dashes into the factory and finds several white girls tied up and about to be sent off to Beijing. She unties a couple of them, who then free the other girls, and then bumps into Miss Dorothy. They carry Jimmy out of the building, and head for Long Island and Muzzy.
Mrs. Meers, Bun Foo, and Ching Ho follow Millie and the gang, but under Muzzy's leadership everyone manages to subdue the nefarious trio. Millie then discovers Jimmy and Miss Dorothy are millionaire siblings and Muzzy is their stepmother, who sent them out into the world to find partners who would love them for who they were and not for their money. Millie marries Jimmy and Miss Dorothy marries Trevor.