This classic novel, set during the "Jazz Age" (the 1920s) in a young postwar America, is the coming-of-age story of an idealistic young financier who, over the course of a memorable summer, learns uncomfortable truths about the relationships between truth and illusion, between past and present. The narrative, written during the time in which it is set by an author who was part of the high-living crowd within which the action takes place, has long been regarded by critics, scholars and readers as an indictment of the so-called "American Dream".

Narrator Nick Carraway, an ambitious beginner in the New York world of finance, describes the circumstances of his arrival in the East and of his discovery that his home is next to that of the wealthy, mysterious Jay Gatsby (who throws spectacular parties), and across a narrow bay from Daisy and Tom Buchanan, a distant relative and her husband. One evening, after returning from a visit to the Buchanans (where famous athlete Jordan Baker was also a guest), Nick sees Gatsby staring across the bay at the Buchanans' home.

Some time later, as Tom and Nick are driving into New York, they pick up Myrtle Wilson, who turns out to be Tom's mistress. All three spend the afternoon in the apartment that Tom has set up for her, which quickly turns into a drunken party. A few days later, Nick attends one of Gatsby's parties and is astonished by the size and exuberance of the crowd of guests. Although he barely manages to have a word with his host, he notices that Gatsby does have a lengthy, private conversation with Jordan, who later reveals that Gatsby asked her a favor - to ask Nick to invite Daisy for a visit, during which Gatsby would drop by "unexpectedly". It turns out that Gatsby and Daisy had a relationship several years previously, before Gatsby (like Nick, a veteran of World War I) went off to war, and that Gatsby is determined to win her back. It also turns out that Gatsby's real name is James Gatz, and that he created a new, wealthy identity for himself after returning from combat. Nick sets up the meeting, and Gatsby and Daisy are reunited.

Over the next few weeks, Gatsby and Daisy continue seeing each other, their feelings for each other returning and deepening. At one point, Daisy makes those feelings clear to Tom who, despite being shocked by what he has learned, insists that he, Daisy, Gatsby, Nick and Jordan do as Daisy has asked and go to New York. While there, Tom confronts Gatsby, who insists that Daisy never loved him. Daisy, however, says that she did, upsetting Gatsby. The high level of emotion becomes so uncomfortable that Tom insists that it's time to return home, and that Daisy ride with Gatsby in Gatsby's car:the car that, as Nick's narration reveals, is involved in the hit-and-run death of Myrtle Wilson.

The car driven by Tom and carrying Nick and Jordan, a few miles behind Gatsby and Daisy, stops at the scene of the accident, where Tom and the others learn what has happened. The upset Tom then drives home, he and Jordan going into the house to see Daisy and Nick encountering Gatsby, who says that at the time of the accident Daisy was driving in an attempt to calm herself, but that he intends to confess. The next day, however, Gatsby is shot by Wilson's grief-stricken husband, who traced him through his unique car and who, after killing Gatsby, kills himself.

As Nick makes preparations for Gatsby's funeral, he is assisted by Gatsby's father, who read about his son's death in the papers and who comes in from the Midwest. Nick is surprised and saddened to realize that out of the hundreds of people who accepted Gatsby's hospitality at his parties, only two come to his funeral. He also learns that Wilson traced Gatsby with the help of Tom Buchanan, who says that Gatsby got what he deserved. Shortly afterwards, Tom and Daisy disappear.

The novel concludes with Nick returning to his Midwestern home, having become disillusioned about the giddy, hard-partying people he once so aspired to be like.