Carmilla opens by informing the reader that the events of the story— recollections from a young woman about her experiences with a vampire—will be presented from the casebook of Doctor Hesselius. This young woman, whose name will later be revealed as Laura, describes her picturesque childhood living in a manor in Styria, Austria with her widowed father and her governesses, Madame Perrodon and Mademoiselle De Lafontaine. She leads a life of isolation, with the nearest village located miles away. Despite her father’s caring nature and her tendency to get her way with everything, Laura feels lonely without any friends her age for companionship.
Laura recalls an event that occurred when she was six years old which has left a distinct impression on her, even years later. She dreamt one night of a girl’s face watching her and then crawling into bed with her. Having been sheltered and kept largely in ignorance of things such as ghost stories, this is the first time she can remember being truly afraid.
Some time after, Laura’s father receives a letter from his friend General Spielsdorf, and Laura is disheartened to learn that the General’s niece Bertha Rheinfeldt, who was meant to come visit them, has died. However, shortly afterwards, they witness a carriage crash from which an injured young girl and the girl’s mother emerge. Laura’s father speaks to the mother, who informs him that her journey is urgent and she must continue on even without her daughter. Laura’s father offers to keep the girl in his care until her mother can return in three month’s time.
Laura’s father sends for a doctor to examine the young girl, Carmilla, while the governesses comment on her beauty. Laura herself is struck by Carmilla, and when she goes to check on her, she soon recognizes her as the girl from her dream. Carmilla remembers Laura as well, and admires Laura’s own beauty. Laura takes this as a sign that they were meant to be friends.
Laura and Carmilla continue to draw closer during the course of her stay, although there are some things about Carmilla that deeply trouble Laura. Laura pushes Carmilla for information about her life, but Carmilla remains secretive. Laura is also confused by the strong affection Carmilla displays for her. Carmilla sometimes makes romantic advances and is overly affectionate to Laura, which makes Laura wonder how Carmilla could hold such intense emotions when they have not known each other for very long.
One day, Carmilla and Laura witness the funeral procession of a young girl out in the woods. Laura pays her respects from afar, but Carmilla refuses and, overhearing the funeral hymns, goes into a fit. This puzzles Laura, who has never heard Carmilla pray or discuss religion. Carmilla and Laura return home and buy charms from a hunchback to ward off the evil dreams and spirits that have been plaguing them both. They discuss the illness that has invaded the area, striking a series of young girls with the same symptoms, although no one can determine the cause.
One day, a delivery of paintings to the house includes one from 1698 depicting Mircalla, Countess Karnstein, who looks exactly like Carmilla. Laura and her father are struck by the portrait, but Carmilla seems unimpressed and asks Laura to go for a walk in the moonlight. There, she comments on her love for Laura, which further embarrasses and frightens Laura. That night while lying in bed, Laura witnesses a large animal resembling a black cat in her bedroom, followed by a sharp stinging sensation in her breasts. She then notices a female figure at the foot of the bed. She is terrified, but unable to leave her locked room.
The next day, Laura recounts what happened to Carmilla and her governesses. Carmilla explains that she was also frightened, but she was protected by the charm they purchased from the hunchback. Laura begins to use her own charm, but she still grows progressively weaker. Not wanting to worry her father, she insists that nothing’s wrong. After dreaming one night of Carmilla drenched in blood, Laura discovers that Carmilla has gone missing. They search all night, and finally find her the next morning. Laura’s father offers a rational explanation for the cause of her actions, saying she was likely sleepwalking.
Laura is examined by Doctor Spielsberg, who speaks with her father about her illness. Laura’s father tells her not to trouble herself about it, but she remains worried. They receive a letter from General Spielsdorf, who arrives at their house shortly after. He has been greatly affected by the death of his niece, and insists that they are too stubborn and set in their ways to believe the true cause of her death. They travel together to the ruins of the estates of Karnstein, leaving a note for Carmilla to follow behind them once she wakes. On the journey, the General tells the story of what happened to Bertha.
The General and his niece had attended a masquerade full of wealthy aristocrats, at which they had been the poorest people present. There, he engaged in conversation with a beautiful young woman whose face was hidden by a mask. The girl, called Millarca, instantly took a liking to Bertha, and vice versa. The General conversed with the girl’s mother, who asked that Millarca be allowed to stay with them for three weeks while she went off on a secret journey of great importance. The General agreed, but Bertha soon fell ill, and, listening, Laura recognizes the same symptoms in herself, and realizes that Millarca’s secretive and private behavior resembles that of Carmilla.
They journey onward towards the ruins and encounter an old woodman who tells them how the village was attacked by vampires and fell to ruins. He informs them that Mircalla’s tomb was moved by the hero who vanquished these vampires. After he departs, the General finishes his story. He recalls how he sent for a physician from Gratz to examine his niece, who told him he suspected Bertha had been bitten by a vampire. The General was skeptical of the existence of the supernatural and hesitant to believe the idea, but he decided to act out of desperation to save his niece. He hid in Bertha’s room and watched as a large black creature crawled into her bed. When he attacked, the creature took the form of Millarca and fled, never to be seen again. Bertha died immediately after. He has since vowed to find the creature responsible for her death and destroy it.
His story completed, the group enters a ruined chapel, where Carmilla appears. The General, shocked, moves to attack her, but she runs away. The General reveals that Carmilla and Millarca are the same, and that she is actually the Countess Mircalla, their names all anagrams of each other. At that moment, Baron Vordenburg, a descendant of the hero who defeated the vampires, arrives. Using his extensive knowledge of the creature, they are able to locate Mircalla’s tomb.
Laura and her father return home, picking up a priest along the way. The priest performs rites, and Laura’s symptoms disappear. The next day, the General and Laura’s father open Mircalla’s grave and, upon seeing that her body is bloodsoaked and faintly breathing, they realize the truth behind the vampire myth. The men drive a stake through her heart and then burn her body. Although Laura was not present for this, she describes the scene from a written report.
With Carmilla defeated, the territory is free from vampires and Laura recovers from her illness. However, she still strongly feels the ramifications of her experiences with Carmilla. She journeys with her father around Italy for a year, but she continues to see images of Carmilla as both the friend she believed her to be and the monster she really was. Despite her father’s best efforts and although the threat of the vampire is gone, Laura feels the effects of her encounters with Carmilla for the rest of her life.