The narrator and her physician husband, John, have rented a mansion for the summer so that she can recuperate from a “slight hysterical tendency.” Although the narrator does not believe that she is actually ill, John is convinced that she is suffering from “neurasthenia” and prescribes the “rest cure” treatment. She is confined to bed rest in a former nursery room and is forbidden from working or writing. The spacious, sunlit room has yellow wallpaper – stripped off in two places – with a hideous, chaotic pattern. The narrator detests the wallpaper, but John refuses to change rooms, arguing that the nursery is best-suited for her recovery.
Two weeks later, the narrator’s condition has worsened. She feels a constant sense of anxiety and fatigue and can barely muster enough energy to write in her secret journal. Fortunately, their nanny, Mary, takes care of their baby, and John's sister, Jennie, is a perfect housekeeper. The narrator's irritation with the wallpaper grows; she discovers a recurring pattern of bulbous eyes and broken necks, as well as the faint image of a skulking figure stuck behind the pattern.
As more days pass, the narrator grows increasingly anxious and depressed. The wallpaper provides her only stimulation, and she spends the majority of her time studying its confusing patterns which, as she asserts, are almost as “good as gymnastics.” The image of the figure stooping down and "creeping" around behind the wallpaper becomes clearer each day. By moonlight, she can see very distinctly that the figure is a woman trapped behind bars. The narrator attempts to convince John to leave the house for a visit with relatives, but he refuses, and the narrator does not feel comfortable confiding in him about her discoveries in the wallpaper. Moreover, she is becoming paranoid that John and Jennie are also interested in the wallpaper and is determined that only she will uncover its secrets.
The narrator's health improves as her interest in the wallpaper deepens. She suspects that Jennie and John are observing her behavior, but her only concern is that they become obstacles to her and the wallpaper. She also begins to notice that the distinct "yellow smell" of the wallpaper has spread over the house, following her even when she goes for rides. At night, the woman in the wallpaper shakes the bars in the pattern violently as she tries to break through them, but she cannot break free. The swirling pattern has strangled the heads of the many women who have tried to break through the wallpaper. The narrator begins to hallucinate, believing that she has seen the woman creeping surreptitiously outside in the sunlight. The narrator intends to peel off the wallpaper before she leaves the house in two days.
That night, the narrator helps the woman in the wallpaper by peeling off the wallpaper halfway around the room. The next day, Jennie is shocked, but the narrator convinces her that she only stripped the wallpaper out of spite. Jennie is able to understand the desire to peel off the ugly wallpaper and does not tell John that anything is out of the ordinary. The next night, the narrator locks herself in her room and continues stripping the wallpaper. She hears shrieks within the wallpaper as she tears it off. She contemplates jumping out of a window, but the bars prevent that; besides, she is afraid of all of the women that are creeping about outside of the house. When morning comes, the narrator has peeled off all of the wallpaper and begun to creep around the perimeter of the room. John eventually breaks into the room, but the narrator does not recognize him. She informs him that she has peeled off most of the wallpaper so that now no one can put her back inside the walls. John faints, and the narrator continues creeping around the room over him.