In 1976 innocent young Mary Ann Singleton comes to San Francisco and, after briefly crashing with worldlier school friend Connie Bradshaw, takes a flat at 28, Barbary Lane in a house owned by the bohemian,pot-growing Mrs. Anna Madrigal, a lady who hints at a mysterious past. Mary Ann becomes one of Anna's 'children', along with personable Brian, who has given up law for bar work, Michael, known as Mouse, a flamboyant gay, and spaced out hippie chick Mona, who gets Mary Ann a job as secretary to kindly advertising executive Edgar Halcyon. Edgar is a man with problems. His handsome but feckless young son-in-law Beauchamp, who works with him, is constantly unfaithful to DeDe, Edgar's daughter whilst Edgar himself is terminally ill, a fact he keeps from his alcoholic wife Frannie whilst visiting a faith healer. A depressed Edgar is much cheered by a chance encounter in the park with Anna Madrigal, learning to his surprise that Anna's mother once ran the brothel where he lost his virginity.

Whilst Anna and Edgar continue their platonic friendship Mary Ann allows herself to spend a week-end with Beauchamp at a hotel, where the promised Z-bed does not materialize and they end up in the sack, though he has virility problems. Next day he ignores her at work. Brian meanwhile has various unsatisfactory sexual encounters, including with Connie, whilst DeDe, playing Beauchamp at his own game, seduces Chinese grocery delivery boy Lionel Wong and Mouse meets Jon, a doctor, and spends the night with him. Mona quits her job as a protest against sexist ad campaigns but joins with Mouse to dissuade Mary Ann from returning home,though a phone lecture from her mother is also instrumental in persuading Mary Ann to stay at Barbary Lane.

After her first night as a volunteer on a Samaritan-type switchboard Mary Ann comes back to be confronted by DeDe, holding the scarf she left in Beauchamp's car, though she successfully convinces DeDe that she has no interest in her husband. Nonetheless DeDe signs up for a fat farm to lose weight. Anna and Edgar begin their affair proper after he has hinted to Beauchamp that he will one day be boss. Mouse feels humiliated after attending Jon's dinner party where bitchy old queens score points off him though Jon tells Mouse he means more to him than all of them. Mary Ann meets Norman, the straight and rather creepy new tenant of the garden flat whilst Mona gets a call from her old friend D'orothea, a beautiful black model.

Michael's parents visit and he shows them around the city, keeping a discreet silence about his sexuality. Anna and Edgar also try to keep their affair secret as he stays the night but Mona is more open, telling Mouse that she and Dorothea were once lovers. Dorothea returns to San Francisco and Mona moves in with her, Anna being unusually upset about her leaving. Mary Ann gets closer to Brian, who consoles her after she found her boss at the Crisis Cedntre had hanged himself. However she starts dating Norman, who sometimes brings a precocious little girl Lexi and asks Mary Ann lots of questions about their fellow tenants. DeDe learns that she is pregnant and, as news of the putative father spreads, she is sexually blackmailed by odious Carson Callas to not tell Beauchamp.

Brian continues to have more disastrous pick-ups, including with two waitresses who turn out to be a mother and daughter. Mona finds it difficult to get through to Dorothea, particularly with regard to Dor's reluctance to see her parents, whom Mona rings in the spirit of reconciliation. DeDe continues her joyless affair with Callas, though at least she gets sex with him, which is more than she does with Beauchamp who,unaware of her situation,announces that he does not want children - before heading to a gay sauna where he picks up Jon. Mary Ann goes on seeing Norman, for whom she feels sorry. She is not to know that he has been employed by a Mrs. Ramsay, a woman with the same surname as Mona, to dish all the dirt on Anna's background. And Anna does indeed have a surprising secret, which she discloses to Edgar.

Jon, who has met DeDe as her gynecologist and likes her, breaks things off with Beauchamp, informing him of his wife's pregnancy. As Christmas approaches Mary Ann confides in Mouse her suspicions of Norman's creepy behavior and snoops around his flat, finding pornographic pictures of Lexi. Mona tracks down Dorothea's parents and invites them for lunch on Christmas Eve. She is amazed to find that they are white and the tablets she found in Dorothea's cabinet were to darken her skin, as it gave her more modeling work. After initial shock there is reconciliation. Norman has found out the secret that Anna told Edgar and intends blackmail. Anna was once a man, Andy Ramsay, who had a sex change operation twenty years earlier. However, after Mary Ann has confronted him over the pictures of Lexi, they argue and he falls off a cliff to his death. Mary Ann returns to Barbary Lane and, having burnt Norman's file on Anna without reading it, joins Mouse, Mona, Brian and Connie to celebrate Christmas with their landlady. Some days later Edgar slips away, having learnt of DeDe's news and asking her to call her baby Anna if it is a girl. The funeral over, Anna visits Edgar's grave, placing a joint on it and bidding him to have fun.