Jerusha Abbott was brought up at the John Grier Home, an old-fashioned orphanage. The children were wholly dependent on charity and had to wear other people's cast-off clothes. Jerusha's unusual first name was selected by the matron off a gravestone (she hates it and uses "Judy" instead), while her surname was selected out of the phone book. At the age of 15, she finished her education and is at loose ends, still working in the dormitories at the institution where she was brought up.
One day, after the asylum's trustees have made their monthly visit, Judy is informed by the asylum's dour matron that one of the trustees has offered to pay her way through college. He has spoken to her former teachers and thinks she has potential to become an excellent writer. He will pay her tuition and also give her a generous monthly allowance. Judy must write him a monthly letter, because he believes that letter-writing is important to the development of a writer. However, she will never know his identity; she must address the letters to Mr. John Smith, and he will never reply.
Jerusha catches a glimpse of the shadow of her benefactor from the back, and knows he is a tall long-legged man. Because of this, she jokingly calls him Daddy-Long-Legs. She attends a "girls' college" on the East Coast. She illustrates her letters with childlike line drawings, also created by Jean Webster.
The book chronicles Jerusha's educational, personal, and social growth. One of the first things she does at college is to change her name to "Judy." She designs a rigorous reading program for herself and struggles to gain the basic cultural knowledge to which she, growing up in the bleak environment of the orphan asylum, was never exposed.
At the end of the book, the identity of 'Daddy-Long-Legs' is revealed as 'Master Jervie,' whom she had met and fallen in love with while she was still unaware that he was 'Daddy-Long-Legs.'