Seven English seniors experience life changes that result in their coincidental departure to be the first guests at the enticingly-pitched Best Exotic Marigold Hotel, a resort "for the elderly and beautiful" in Jaipur, India: Recently widowed housewife Evelyn (Judi Dench) must sell her home to cover huge debts. Graham (Tim Wilkinson), a High Court judge who lived in India as a boy, abruptly decides to retire and return there. Jean (Penelope Wilton) and Doug (Bill Nighy) seek a retirement they can afford with the money left after investing in their daughter's internet start-up. Muriel (Maggie Smith), a retired housekeeper, needs a hip replacement, which she can get quickly and inexpensively in India. Wealthy Madge (Celia Imrie) hunts another husband. Norman (Ronald Pickup) is an aging lothario, still on the make for one-night stands.
To varying degrees they are each overwhelmed by the unfamiliar environment upon their arrival. Furthermore, despite the enthusiastic attitude of its new manager Sonny (Dev Patel), the Marigold is dilapidated and its meals too spicy for their English palates. Jean mostly stays in the hotel reading, whereas Doug explores sights suggested by Graham, who has found that much has changed since his school years, and disappears on secret outings. Muriel, despite her bigotry, comes to grudgingly appreciate her physician for his skill, and the hotel cleaner (a member of the "untouchable" caste who speaks no English) for her kindness.
Discovering that she cannot even afford the Marigold, Evelyn gets her first job, advising the staff of a marketing call centre how to better interact with their British contacts. Sonny struggles to convince an investor for funds to improve the hotel. Madge joins an exclusive club, where she fails to pass herself off as Princess Margaret, and when asked to be seated next to a rich bachelor it turns out to be Norman, who is having no success romancing the women there.
Muriel's physician takes her to the home of the hotel cleaner, where she is surprised to find the young woman grateful for her "kindness" in simply acknowledging her; Muriel confides about her life in service, managing a family household and raising their children, which ended in abrupt dismissal. At the club, Madge helps Norman meet Carol (Diana Hardcastle), an English life-long resident of India.
Dropping his routine, Norman admits that he is just old and lonely, and Carol admits the same, beginning a relationship. Graham confides to Evelyn that he is trying to find the boyfriend he regrets abandoning in disgrace when he left India to go to university. Jean is attracted to the retired judge, and makes a rare excursion to follow him, but is humiliated when he explains that he is gay.
Accompanied by Doug and Evelyn, Graham reunites with his former lover, who has lived a generally happy life in an arranged marriage of mutual trust and respect. After confiding his contentment to Norman, Graham dies peacefully of a heart attack.
Evelyn and Doug grow increasingly close, and following Graham's cremation, she tearfully confides the lack of trust in her marriage, witnessed by an increasingly jealous Jean. Doug finally loses his temper at her negativity and lack of respect.
Sonny's more successful brothers each own a third of the Marigold and want it knocked down. His mother (Lillete Dubey) wants him back in Delhi for an arranged marriage, but Sonny is in love with Sunaina (Tena Desae), who works at Evelyn's call centre. Sonny's mother declares the Marigold a financial disaster; the residents are told to relocate.
Norman decides to move in with Carol. Madge and Evelyn prepare to leave. Jean and Doug get their investment back, enabling them to return to England, but a traffic jam stops them from getting to the airport, and Jean leaves him (literally and figuratively) to get there in a one-passenger pedicab, as Doug makes his way back to the Marigold. Meanwhile, Muriel sneaks access to Sonny's computer for a look at the accounts, and discovering that the business plan is in fact sound, convinces the reluctant investor to provided the needed funds.
The next morning, Sonny and Sunaina confront his mother, who concedes to his marriage plans when reminded that her husband had similarly stood up to his parents to marry her. Muriel reveals that the hotel simply needs better management, and offers to stay on in that capacity. The other guests agree to stay as well. In the final montage: Madge in her club dines with a wealthy Indian man. Norman washes socks and Carol reads the Kama Sutra in their room. Muriel is behind the front desk welcoming new guests. Sonny and Sunaina ride his motorbike through Jaipur, passing Doug and Evelyn riding a scooter.