Part 1: Nobody's Fault

On the death of his father, Arthur Clennam returns from China to an England he has not seen for twenty years. He passes on tho his mother, an invalid now confined to her room, a deathbed gift from his father - a watch paper inscribed witht the words 'Do Not Forget'. His mother is still served by her faithful retainers Affery, who was Arthur's nurse through his cheerless childhood, and her husband Flintwiinch, who now sees to the family business under Mrs Clennam's eye. A new presence in the gloomy house is a seamstress known as Little Dorrit.

Intrigued by his father's cryptic message and the sense that his mother is expiating a crime, Clennam begins an investigation in Little Dorrit's background. He renews his acquaintance with his erstwhile sweetheart Flora Casby, now a plump, talkative widow, and her father, who employs a Mr Pancks to collect rents from the impoverished inhabitants of Bleeding Heart Yard, a slum backwater. He traces Little Dorrit to the Marshalea debtor's prison where she lives with her father William, condemned there for the past twenty years, her sister Fanny, a dancer, and her wastrel brother Tip.

Clennam attempts to trace Mr Dorrit's credits through a lead Little Dorrit has given him, the name of Barnacle. Taken to the country house of his friend Meagles, Clennam meets, and half falls in love with, his daughter Minnie. She, however, is romantically involved with Henry Gowan, a disillusioned artist whom she later marries. Meagles introduces Clennam to an inventor, Daniel Doyce, who has had no luck getting his inventions patented.

Clennam resigns from his family business and sets up an engineering firm with Doyce in Bleeding Heart Yard. He also attempts to see Doyce's patent requests through the impenetrabilities of the Circumlocution Office, presided over by the Barnacle family.

Pancks, Meanwhile, has located an unclaimed legacy and is able to prove William Dorrit's right to it. Clennam fins Little Dorrit at Flora's house and tells her the good news; together they go to the Marshalsea to break the news to her father. During the flurry of preparations for leaving, Little Dorrit grows faint with emotion and Clennam carries her to the departing coach. While the Dorrits are abroad, cClennam is persuaded by Pancks to invest in the entrepreneurial Mr Merdle's financial schems, and whn these collapse they with them both Pancks' and Clennam's entire fortunes. Merdle commits suicide and Clennam fins himself bankrupt, ill and distraught, occupying Dorrit's old rooms in the Marshalsea debtors' prison. It is there that Little Dorrit finds him on her return from abroad.

Part 2: Little Dorrit's Story

Born in the debtor's prison, Little Dorrit from an early age learns to read and write and sew. She advertises for her services, which elicits a response from Mrs Clennam. Little Dorrit becomes a regular visitor at the gloomy house and, inadvertently, party to various family secrets including that of Arthur's origins: he was the illicit progeny of a relationship between his father and a dancer. Suspicious of an expensive bracelet which Fanny has acquired, Little Dorrit allows her sister to take her to the palatial establishment of Mrs Merdle in Mayfair, and is told of her son Sparkler's infatuation with Fanny and her attempts to buy Fanny off.

On Clennam's return to England, Little Dorrit formas an unspoken and unnoticed attachment to him, deepened into love by her gorwing knowledge of his origins and harsh childhood. When her brother Tip is released from prison after Clennam pays his debts, Little Dorrit guesses the identity of their unknown benefactor and goes to thank Clennam at his rooms. Clennam tells her of Pancks' discovery and her father's imminent release.

Amid the preparations for departure, Little Dorrit alone has mixed feelings about leaving the Marshalsea. She reluctantly follows her family abroad and watches Fanny relish her new position of power over the still-adoring Sparkler, whom she later marries. At the wedding banquet, William Dorrit is overcome and suddenly imagines himself back in the Marshalsea, addressing the assembled society luminaries as if they were inmates. Little Dorrit nurses him through his illness, and upon his death learns that the collapse of the Merdle empire has taken Clennam's business with it.

She goes to Mrs Clennam without his knowledge and demands the money owing to Clennam's real mother - money sent her by her husband to enable that woman to be looked after, which Mrs Clennam has kept - and with it pays off Clennam's creditors. As Flintwinch attempt to retrieve the family fortune from the cellar, the house collapses. Not until John Chivery, an erstwhile suitor of Little Dorrit's, tells Clennam of her lover for him does Clennam become aware of his own enduring affection for her, and when Little Dorrit visits him the two decide to marry.