Jerry Mulligan, played by Gene Kelly, is a former soldier who decided to stay in Paris after World War II to pursue his passion for art. He struggles to sell his paintings and survives by selling them for a few francs to tourists. One day, he meets a beautiful young woman named Lise Bouvier (Leslie Caron) on the streets of Paris, and they quickly become smitten with each other. However, he soon discovers that she is already in a romantic relationship with his friend and fellow artist, Henri Baurel (Georges Guétary).
Jerry also befriends Adam Cook (Oscar Levant), a struggling pianist who is in love with Henri's singing partner, the fiery and temperamental Simone (Nina Foch). Henri's wealthy parents do not approve of his relationship with Simone, and they pressure him to marry a more suitable woman. Meanwhile, Milo Roberts (Nina Foch), a wealthy American socialite, takes an interest in Jerry's art and offers to support him financially.
Jerry and Lise's romance is complicated by the fact that Lise is secretly a dancer in a nightclub run by a shady character named Monsieur Z (George Gershwin). When Jerry learns the truth about Lise's job and her relationship with Henri, he is heartbroken and decides to leave Paris. However, Milo convinces him to stay and offers to commission him for a painting.
The climax of the film is a breathtaking dance sequence choreographed by Kelly and inspired by the music of George and Ira Gershwin. Set to the famous tune "An American in Paris," the sequence features Kelly and Caron dancing through the streets of Paris in a dreamlike sequence that captures the beauty and romance of the city.
In the end, Jerry realizes that he cannot compete with Henri for Lise's affection and decides to leave Paris. However, as he is about to leave, Lise runs after him and confesses her love. The film ends with Jerry and Lise embracing as they declare their love for each other.