The court of King Arthur is celebrating New Year’s Eve, but at the height of the festivities, a massive green figure bursts in, terrifying them. This Green Knight tells the court that he desires their participation in a game, in which he and one of the knights present will trade axe blows. The chosen knight will take the first strike, and then he must wait a whole year to receive a strike in return from the Green Knight.
The knights make no answer, but when their visitor mocks them for cowardice, Arthur steps up and offers himself as the contender. Just as the king readies himself to take his strike with the axe, Sir Gawain stops him and offers himself instead. Gawain strikes at the calmly standing Green Knight, and cuts the knight's head off. The court is astonished when the knight then picks up his head from the floor and instructs Gawain to find him at the Green Chapel before riding away.
After that strange event, the court goes back to normal. The seasons pass until Michelmas in early autumn, when Gawain must depart for his trial. Wearing the court’s finest armor, including a shield decorated with a symbolic Christian pentangle, Gawain nervously sets off. He journeys through wild country, facing danger after danger. Finally, on Christmas day, when he is freezing and almost losing hope, Gawain prays to Mary for guidance and a castle appears in the distance.
At the castle, he is welcomed heartily by its lord, who introduces him to two ladies, his beautiful wife and an old maid. The lord invites Gawain to play a game. Each day the lord will go out to hunt while Gawain rests in the court, and by the end of the day, they will swap whatever they have won. It soon becomes clear that what there is to be won at court is the host’s beautiful wife. She steals in to Gawain’s chamber when her husband has gone and woos Gawain, who strains to be chivalrous and charming without succumbing to desire. Their playful conversation is alternated with descriptions of the hunting, connecting the acts of sport and courtship.
On the first day, the lord hunts a deer, and the lady gives Gawain one kiss. When the men meet for dinner, the lord presents Gawain with the meat and, befitting the deal, Gawain exchanges it for the kiss he has received. On the second day, the lord exchanges a boar for two kisses. On the third day, the lord kills a fox and the lady kisses Gawain three times. Furthermore, she asks for a love token from Gawain. When he claims he has nothing to give, she starts offering him tokens of her own. He refuses, until she offers him a green girdle, which she explains will protect the wearer from death. Hopeful that the girdle might protect him from the Green Knight, Gawain accepts. He hides it under his clothes to keep it a secret from the lord.
The next day, Gawain anxiously leaves his new friends to go and face the Green Knight at the Green Chapel. The lord sends a servant with him to show him the way and the pair soon arrive at a forest, where the servant tries to dissuade Gawain from facing the Green Knight. But Gawain doesn’t want to be a coward. He goes on alone. The terrain becomes strange, tall rocks obscure his view, but eventually he finds a grass-covered cave. He hears the Knight sharpening his weapon inside and prepares himself.
The Knight emerges and makes two false strikes, the first because Gawain flinches from fear and the second to praise him for not flinching. The third strike lands, but it only wounds Gawain. It is then that the Green Knight reveals that his name is actually Bertilak, that he is the lord of the castle where Gawain has been staying, and that he has been testing Gawain. He explains that he has punished Gawain with this third strike for his dishonesty in hiding the green girdle on the third day of the hunt. He also explains that the old woman at the castle is Morgan Le Faye, a wizardess, who is the power behind the whole game "beheading game" and who wanted to test Arthur's court. An embarrassed Gawain, with the green girdle on his arm as a sign of his failure, returns to Camelot, where a hero’s welcome awaits. When he confesses his sins, King Arthur admires his humility and orders the court to wear symbolic green bands in solidarity.