Gelsomina (Fellini's wife Giulietta Masina), a fey young woman, is sold for 10,000 lire by her impoverished mother to the Gypsy Zampanò (Anthony Quinn), to take the place of her now dead sister Rosa. Zampanò makes a living as an itinerant strongman, entertaining crowds by breaking an iron chain just by expanding his chest, and then passing around a hat for tips. In short order Gelsomina's naive and clownish instinct emerges, although Zampanò's methods present her with a callous foil. He trains her to play the snare drum and trumpet, dance a bit, and clown for the audience. Despite her willingness to please, he relies on intimidation and even cruelty at times to maintain his dominion.
Finally, she rebels and leaves, making her way into town. There she watches the act of another street entertainer, Il Matto ("The Fool"), a talented high wire artist and clown (Richard Basehart). When Zampanò finds her there, he forcibly takes her back. They join a ragtag traveling circus, and find Il Matto already working there. For reasons he himself cannot understand, Il Matto maliciously teases the strongman at every opportunity. After getting drenched by a pail of water, Zampanò chases after his tormentor with his knife drawn; both men are put in jail.
Il Matto is released first. He shows Gelsomina that there are alternatives to her servitude. Despite this, he talks her out of leaving Zampanò, imparting to her his philosophy that everything and everyone has a purpose, even a pebble, even her. She decides that hers is to take care of her unappreciative master. After Zampanò is freed, she asks if he wants to marry her, but he brushes her off.
Both men are fired from the circus. During the course of his travels, Zampanò comes upon Il Matto, fixing a flat tire on an empty stretch of road. He punches the clown several times and, satisfied with his revenge, starts to leave. Il Matto complains that his watch has been broken, then unexpectedly collapses and dies. Zampanò hides the body and pushes his car off the road.
Zampanò is relieved to get away unseen, but the killing breaks Gelsomina's spirit. After ten days, she is still unable to deal with her grief. When he cannot bear it any longer, he abandons her while she is taking a nap.
Four or five years later, he is drawn to a woman singing a tune Gelsomina often played. He learns that the woman's father had found Gelsomina on the beach and kindly taken her in. However, she wasted away and died. Zampanò gets drunk and wanders to the beach, where he breaks down and cries uncontrollably.