Katie Morosky is a serious politically minded student radical in the 1930s who falls for her complete opposite, the carefree and handsome big man on campus Hubbell Gardiner. Although they are attracted to each other from the beginning, nothing happens between the two until they meet up years later during World War II and begin a romance. While Katie encourages Hubbell to become a serious novelist, he is content to move to Hollywood and write for the movies--a pursuit she finds shallow. Hubbell, meanwhile, admires Katie's passion for causes, but grows weary of her do-or-die political activism--something that becomes dangerous for both of them during the dark times of McCarthyism. With conflicts rising to the surface that force them to face their core principles as individuals, it soon becomes clear that love will not be enough to keep them together.

Told partly in flashback, it is the story of Katie Morosky (Barbra Streisand) and Hubbell Gardiner (Robert Redford). Their differences are immense: she is a stridently vocal Marxist Jew with strong anti-war opinions, and he is a carefree WASP with no particular political bent. While attending the same college, she is drawn to him because of his boyish good looks and his natural writing skill, which she finds captivating, although he doesn't work very hard at it. He is intrigued by her conviction and her determination to persuade others to take up social causes. Their attraction is evident, but neither of them act upon it, and lose touch after graduation.

The two meet again at the end of World War II while Katie is working at a radio station, and Hubbell, having served as a naval officer in the South Pacific, is trying to return to civilian life. They fall in love despite the differences in their background and temperament. Soon, however, Katie is incensed by the cynical jokes Hubbell's friends make at the death of FDR and is unable to understand his acceptance of their insensitivity and shallow dismissal of political engagement. At the same time, his serenity is disturbed by her lack of social graces and her polarizing postures. Hubbell breaks it off with Katie, but, soon, agree to work things out.

When Hubbell seeks a job as a Hollywood screenwriter, Katie believes he's wasting his talent and encourages him to pursue writing as a serious challenge instead. Despite her growing frustration, they move to California, where he becomes a successful albeit desultory screenwriter, and the couple enjoy an affluent lifestyle. As the Hollywood blacklist grows and McCarthyism begins to encroach on their lives, Katie's political activism resurfaces, jeopardizing Hubbell's position and reputation.

Alienated by Katie's persistent abrasiveness, Hubbell has a liaison with Carol Ann, his college girlfriend and the departing ex-wife of his best friend J.J., even though Katie is pregnant. Katie and Hubbell decide to part when she finally understands he is not the man she idealized when she fell in love with him and will always choose the easiest way out, whether it is cheating in his marriage or writing predictable stories for sitcoms. Hubbell, on the other hand, is exhausted, unable to live on the pedestal Katie erected for him and face her disappointment in his decision to compromise his potential.

Katie and Hubbell meet by chance some years after their divorce, in front of the Plaza Hotel in New York City. Hubbell, who is with a stylish beauty and apparently content, is now writing for a popular sitcom as one of a group of nameless writers. Katie has remained faithful to who she is: flyers in hand, she is agitating for the newest political causes.

Katie, now re-married, invites Hubbell to come for a drink with his lady friend, but he confesses he can't. Katie's response acknowledges what they both finally understand: Hubbell was at his best when he was with her, and no one will ever believe in him or see as much promise in him as she once did. Their past is behind them; all the two share now (besides their daughter, whom they name Rachel) is a memory of the way they were.

Roger Ebert of the Chicago Sun-Times called the film "essentially just a love story, and not sturdy enough to carry the burden of both radical politics and a bittersweet ending." He added, "It's easy to forgive the movie a lot because of Streisand. She's fantastic. She's the brightest, quickest female in movies today, inhabiting her characters with a fierce energy and yet able to be touchingly vulnerable . . . The Redford character perhaps in reaction to the inevitable Streisand performance, is passive and without edges. The primary purpose of the character is to provide someone into whose life Streisand can enter and then leave. That's sort of thankless, but Redford handles it well." [10] Conversely, TV Guide awarded the film three out of four stars, calling it "an engrossing, if occasionally ludicrous, hit tearjerker" and "a great campy romance."[11]

In her review, Pauline Kael noted that "the decisive change in the characters' lives which the story hinges on takes place suddenly and hardly makes sense." She was not the only critic to question the gap in the plot; of the scene in the hospital shortly after Katie gives birth and they part indefinitely, Molly Haskell wrote, "She seems to know all about it, but it came as a complete shock to me."[12] The sloppy editing was exposed in other ways as well; in his review, critic John Simon wrote: "Some things, I suppose, never change, like the necktie Redford wears in two scenes that take place many years apart."

Variety called it "a distended, talky, redundant and moody melodrama" and added, "The overemphasis on Streisand makes the film just another one of those Streisand vehicles where no other elements ever get a chance".[13] Time Out London observed, "[W]ith the script glossing whole areas of confrontation (from the communist '30s to the McCarthy witch-hunts), it often passes into the haze of a nostalgic fashion parade. Although Streisand's liberated Jewish lady is implausible, and emphasises the period setting as just so much dressing, Redford's Fitzgerald-type character . . . is an intriguing trailer for his later Great Gatsby. It's a performance that brings more weight to the film than it deserves, often hinting at depths that are finally skated over"