The book begins in the 1920s with the narrator, Nick Carraway, speaking about his childhood in the mid-west with his rich family. He states that they “have been prominent, well-to-do people in this middle western city for three generations.” Heading east to learn about the bond business, he moved into West Egg village in New York City. His home is a modest, small place positioned between two huge mansions, all for eighty meager dollars a month. One of the mansions is an imitation of a posh hotel in Normandy with a marble swimming pool and more than forty acres of land. This palace belongs to Jay Gatsby, Nick’s young, mysterious neighbor.

Shortly after his arrival, Nick travels across the Sound to the more fashionable East Egg to visit his cousin Daisy Buchanan and her husband, Tom, a hulking, imposing man whom Nick had known in college.

 They introduce Nick to Jordan Baker, an attractive, cynical young golfer with whom Nick begins a romantic relationship. She reveals to Nick that Tom has a mistress, Myrtle Wilson, who lives in the "valley of ashes": an industrial dumping ground between West Egg and New York City. Not long after this revelation, Nick travels to New York City with Tom and Myrtle to an apartment they keep for their affair. At the apartment, a vulgar and bizarre party takes place. It ends with Tom breaking Myrtle's nose after she annoys him by saying Daisy's name several times.

As the summer progresses, Nick eventually receives an invitation to one of Gatsby's parties. Nick encounters Jordan Baker at the party, and they meet Gatsby himself, an aloof and surprisingly young man who recognizes Nick from their same division in the war. As the summer unfolds, Gatsby and Nick become friends and Jordan and Nick begin to see each other on a regular basis. Nick and Gatsby had a ride to the city one day and there Nick meets Meyer Wolfshiem, one of Gatsby's associates and Gatsby's link to organized crime. Through Jordan, Nick later learns that Gatsby knew Daisy from a romantic encounter in 1917 and is deeply in love with her.

It was no coincidence that Jay Gatsby lives across the bay from the Buchanans. He purposely bought a mansion in West Egg across from Daisy. For the longest time, the only thing he had of Daisy was the green light luminating on her dock. Gatsby's extravagant lifestyle and wild parties are an attempt to impress Daisy in the hopes that she will one day appear again at Gatsby's doorstep. Gatsby now wants Nick to arrange a reunion between himself and Daisy. This was Gatsby’s constant reminder that what he couldn’t have was so close to him.  Finally, Nick secretly brought Daisy and Gatsby together for tea at Gatsby’s hopeful request.

Nick invites Daisy to have tea at his house, without telling her that Gatsby will also be there. After an initially awkward reunion, Gatsby and Daisy reestablish their connection.

After multiple secretive visits between Jay and Daisy, Gatsby invites everyone to his home for lunch. Nick, Jordan, Tom, Daisy and Gatsby are all there. They begin an affair and, after a short time, Tom grows increasingly suspicious of his wife's relationship with Gatsby. At a luncheon at the Buchanans' house, Daisy speaks to Gatsby with such undisguised intimacy that Tom realizes she is in love with Gatsby. Though Tom is himself involved in an extramarital affair, he is outraged by his wife's infidelity. He forces the group to drive into New York City and confronts Gatsby in a suite at the Plaza Hotel, asserting that he and Daisy have a history that Gatsby could never understand. In addition to that, he announces to his wife that Gatsby is a criminal whose fortune comes from bootlegging alcohol and other illegal activities. Daisy realizes that her allegiance is to Tom, and Tom contemptuously sends her back to East Egg with Gatsby, attempting to prove that Gatsby cannot hurt him. The next series of events are surprising and horrible. Myrtle Wilson is killed by a drive by. The person was driving a huge, lavish, yellow Rolls Royce. The owner of the vehicle is Jay Gatsby

Nearing dawn the next morning, Nick goes to Gatsby's house. While the two men turn the house upside down looking for cigarettes, Gatsby tells Nick more about how he became the man he is and how Daisy figured into his life. 

The action then switches back to Wilson who, distraught over his wife's death, sneaks out and goes looking for the driver who killed Myrtle. Nick retraces Wilson's journey, which placed him, by early afternoon, at Gatsby's house. Wilson murders Gatsby and then turns the gun on himself.

After Gatsby's death, Nick is left to help make arrangements for his burial. What is most perplexing, though, is that no one seems overly concerned with Gatsby's death. Daisy and Tom mysteriously leave on a trip and all the people who so eagerly attended his parties, drinking his liquor and eating his food, refuse to become involved. Even Meyer Wolfshiem, Gatsby's business partner, refuses to publicly mourn his friend's death. A telegram from Henry C. Gatz, Gatsby's father, indicates he will be coming from Minnesota to bury his son. Gatsby's funeral boasts only Nick, Henry Gatz, a few servants, the postman, and the minister at the graveside. Despite all his popularity during his lifetime, in his death, Gatsby is completely forgotten.