In Edwardian London, Henry Higgins (Rex Harrison), an arrogant, irascible, misogynistic teacher of elocution, believes that the accent and tone of one’s voice determines a person’s prospects in society. He boasts to a new acquaintance, Colonel Hugh Pickering (Wilfrid Hyde-White), himself an expert in phonetics, that he could teach any woman to speak so “properly” that he could pass her off as a duchess at an embassy ball, citing, as an example, a young flower seller from the slums, Eliza Doolittle (Audrey Hepburn), who has a strong Cockney accent.
Eliza goes to Higgins seeking speech lessons. Her great ambition is to work in a flower shop, but her thick accent makes her unsuitable for such a position. All she can afford to pay is a shilling per lesson, whereas Higgins is used to training wealthier members of society. Pickering, who is staying with Higgins, is intrigued by the idea of passing a common flower girl off as a duchess and bets Higgins he cannot make good his boast, offering to pay for the lessons himself.
Eliza’s father, Alfred P. Doolittle (Stanley Holloway), a dustman, shows up three days later, ostensibly to protect his daughter’s virtue, but in reality simply to extract some money from Higgins, and is bought off with £5. Higgins is impressed by the man’s honesty, his natural gift for language, and especially his brazen lack of morals – “Can’t afford ’em!” claims Doolittle. Higgins recommends Doolittle to a wealthy American who is interested in morality. Eliza goes through many forms of speech training, such as speaking with marbles in her mouth, enduring Higgins’ harsh approach to teaching and his treatment of her personally. She makes little progress, but just as she, Higgins, and Pickering are about to give up, Eliza finally “gets it”; she instantly begins to speak with an impeccable upper class accent.
As a test, Higgins takes her to Ascot Racecourse, where she makes a good impression with her stilted, but genteel manners, only to shock everyone by a sudden and vulgar lapse into Cockney while encouraging a horse to win a race: “C’mon Dover, move your bloomin’ arse!” Higgins, who dislikes the pretentiousness of the upper class, partly conceals a grin behind his hand. Eliza poses as a mysterious lady at an embassy ball and even dances with a foreign prince. At the ball is Zoltan Karpathy (Theodore Bikel), a Hungarian phonetics expert trained by Higgins. After a brief conversation with Eliza, he certifies that she is not only Hungarian, but of royal blood. This makes Higgins’ evening, since he has always looked upon Karpathy as a bounder and a crook.
After all the effort she has put in however, Eliza is given hardly any credit, all the praise going to Higgins. This, and his callous treatment towards her afterwards, especially his indifference to her future, causes her to walk out on him, leaving him mystified by her ingratitude. Accompanied by Freddy Eynsford-Hill (Jeremy Brett), a young man she met at Ascot and who has strongly become romantically infatuated and charmed by her, Eliza returns to her old stomping ground at Covent Garden, but finds that she no longer fits in as she a polite lady now. She meets her father, who has been left a large fortune by the wealthy American Higgins had sent him to and is resigned to marrying Eliza’s stepmother. Alfred feels that Higgins has ruined him, since he is now bound by morals and responsibility. Eventually, Eliza ends up visiting Higgins’ mother, who is incensed at her son’s behavior.
Higgins finds Eliza the next day and attempts to talk her into coming back to him. During a testy exchange, Higgins becomes incensed when Eliza announces that she is going to marry Freddy and become Karpathy’s assistant. Higgins explodes and Eliza is satisfied that she has had her “own back.” Higgins has to admit that rather than being “a millstone around my neck… now you’re a tower of strength, a consort battleship. I like you this way.” Eliza leaves, saying they will never meet again. After an argument with his mother—in which he asserts that he does not need Eliza or anyone else — Higgins makes his way home, stubbornly predicting that Eliza will come crawling back. However, he comes to the horrified realization that he has “grown accustomed to her face.” Then, to his surprise, Eliza reappears in Higgins’ study: she knows now that he really deeply cares for her after all.