In feudal Japan, two sculptors trek through a snow-covered forest as the elder master plans to cut down a mighty tree and carve a statue of the Buddhist goddess Kannon. A raging blizzard forces them to take shelter in an abandoned cottage. While they sleep, a mysterious woman enters and freezes the master to death. She spares the younger apprentice, Yosaku, Akira Ishihama, making him promise to keep what he saw a secret.
Years later, [Yosaku] is living with the old master's widow. The large tree is cut down and brought to the village, and he is instructed to carve the statue the master would have wanted, to be placed in the temple.
A young woman named Yuki travels through town and stays the night at Yosaku's home during a heavy rain. The master's widow falls ill, and Yuki, whose parents were doctors, goes to search for herbs to cure the widow.
While passing through the village, feudal Lord Jito is harsh with the widow, blaming her for the children's misbehavior. On her deathbed, the widow asks Yuki to marry Yosaku.
At a Buddhist service, the shamaness or medium running the ceremony is suspicious of Yuki and flings boiling water at her, burning her skin.
Five years pass, and Yuki and Yosaku are married and have a son. Jito proposes to the high priest that Yosaku and Gyōkei, Mizuho Suzuki, an expert sculptor, both sculpt a Kannon statue, and the priest will decide which statue the temple prefers.
Jito's men accuse Yosaku of stealing the large tree, despite Jito having previously given him permission. If he cannot pay a fee within five days, Yosaku will be arrested.
Yuki tries to appeal to the governor but he is away. She instead meets the governor's wife, who is caring for her ill son. Yuki promises to cure the boy, and she transforms into the Snow Woman and creates snow to quell the fever. By the time the governor returns, the boy is cured, and he pays Yuki for her work. Yuki uses the money to pay Jito's fee.
Yosaku is nearly finished the statue, but struggles to finish its face. He finds inspiration in Yuki, who becomes his muse for the statue's face.
Gyōkei presents his golden statue to the high priest, but the priest is not impressed, saying the face lacks a compassionate soul.
Later, the two sculptors attend a festival to pray for inspiration for the statue's eyes. The shamaness again tries to burn Yuki, but she flees. She is attacked by Jito's men, who attempt to rape her. Turning into the Snow Woman, Yuki freezes Jito to death.
The shamaness accuses Yuki of killing Jito, and Yosaku realizes that Yuki is the Snow Woman who killed his master. He confronts her about their first encounter, breaking his promise. Yuki says she must kill him, but their son cries in the other room. Yuki lets Yosaku live and disappears into a blizzard, telling him to care for their son and finish his statue. In the final scene, Yuki looks back regretfully at the family she is deserting, and Yosaku sees in her face the compassionate expression he needs to finish his statue.
