The film chronicles the early life of French fashion magnate Gabrielle "Coco" Chanel (AUDREY TAUTOU), who grew up in an orphanage with her sister, Adrienne (MARIE GILLAIN). The Chanel sisters grow up to become singers on the French nightclub scene circa 1908, hoping they will meet rich barons who would marry them.
When Adrienne gets her wish or so she thinks, Coco gravitates to a wealthy older man named Etienne Balsan (BENOIT POELVOORDE) and becomes a glorified squatter at his French country estate. She gives him sex, sings at his pretentious cocktail parties, and makes hats for his rich female neighbors. In return, he gives her an ornate mansion to live in, good meals (although she is relegated to the kitchen with the other hired help), and horses to ride.
Against her better judgment, Coco eventually falls in love with Etienne's colleague, a British businessman named Arthur "Boy" Capel (ALESSANDRO NIVOLA). He falls for her, too, even as he keeps his engagement to a wealthy woman back in London a secret. Coco eventually finds out, forcing her to choose between a continued life of sheltered luxury at the Balsan estate where she will always be subservient to the generally good-hearted Etienne or striking out on her own and fulfilling her fashion-designing dreams.