At the conclusion of their senior high school year, the well-meaning underachiever Lloyd Dobler finds himself enchanted by the valedictorian, Diane Court. Despite belonging to different social circles, he plans to ask her out. Living with his single mother sister Constance while his parents serve in the U.S. Army in Germany, Lloyd has no concrete plans for his future. On the other hand, Diane comes from a privileged academic background, raised by her caring divorced father, Jim, who runs the retirement home where she is employed. She has aspirations of accepting a prestigious fellowship in England after summer.
Unexpectedly, Diane agrees to attend their graduation party with Lloyd, which surprises many. Their next outing takes place over dinner at Diane's home, where Lloyd finds it challenging to make a good impression on Jim. Furthermore, complications arise when the Internal Revenue Service informs Jim that he is under investigation.
As their relationship develops, Lloyd introduces Diane to the elderly residents at the retirement home and even teaches her how to drive her newly gifted manual Ford Tempo. Their bond deepens, but it raises concerns for Diane's protective father. Meanwhile, Lloyd's musician best friend Corey, who is struggling with her own heartbreak from a previous relationship, cautions him to protect Diane’s feelings.
Seeing Lloyd as an unsuitable partner for his daughter, Jim pressures Diane to end her relationship with him, suggesting she part with a pen as a farewell gift. Anxious about her father's disapproval, Diane reluctantly tells Lloyd she needs to focus on her studies, handing him the pen. Heartbroken, Lloyd seeks guidance from Corey, who urges him to "be a man." Amidst this turmoil, tension rises as Jim's financial troubles escalate when he discovers his credit cards have been canceled due to the IRS investigation.
In a heartfelt gesture, Lloyd stands outside Diane’s bedroom window at dawn, playing “In Your Eyes” by Peter Gabriel— the song that accompanied their intimate moment. The following day, Diane meets with the IRS investigator, who presents evidence against Jim for embezzling funds from the retirement home. He suggests that she accept her fellowship since her father's issues are set to worsen.
Confronting her father about the hidden cash, Diane learns that Jim had taken it to ensure her financial independence, justifying his actions by claiming he cared for the residents better than their families ever could. Overwhelmed by the revelations, Diane seeks comfort in Lloyd at his kickboxing gym.
As summer concludes, Jim faces a nine-month imprisonment sentence. Lloyd visits him, revealing plans to accompany Diane to England; Jim reacts with disappointment. Despite the tension, Diane arrives to bid farewell, and they share a heartfelt embrace. She gifts the same pen back to Lloyd, asking him to write her while in England. As they board their flight, Lloyd supports and comforts Diane, who is apprehensive about flying, ensuring they stand united in their new chapter together.
