Chiyo Sakamoto (Suzuka Ohgo), a young girl from a poverty stricken fishing village, is sold along with her older sister Satsu (Samantha Futerman) into a life of servitude by her aging father. Chiyo is taken in by Mrs. Kayoko Nitta (Kaori Momoi), the Mother (proprietress) of a geisha house in Gion, one of the most prominent geisha districts in Kyoto, whereas Satsu is sold to a prostitution brothel.
At the okiya, Chiyo meets another young girl named Pumpkin (Zoe Weizenbaum), the cranky Granny (Kotoko Kawamura), and the okiya’s only working geisha, Hatsumomo (Gong Li) who is famous for her breathtaking beauty. Chiyo soon discovers Hatsumomo is secretly a cruel and jealous woman that views Chiyo as a potential rival due to her striking bluish-gray eyes, along with being a change in Mother’s future financial dependence. Hatsumomo then goes out of her way to deliberately make Chiyo’s new life miserable by having her take the blame for everything and intentionally withholding information of her sister’s whereabouts in the pleasure district. However, Auntie (Tsai Chin) is aware of this and warns Chiyo against trusting and angering Hatsumomo, given her history with the ill-mannered geisha.
Chiyo tracks down Satsu and makes plans to run away together. However, upon returning to the okiya she discovers Hatsumomo with her boyfriend, Koichi (Karl Yune), which is against the rules of the Geisha lifestyle. When they are caught, Hatsumomo attempts to twist the situation by accusing Chiyo of stealing. Chiyo denies this and informs Mother of what she saw in the shed. As a result, everyone is barred from leaving the okiya at night except to attend work engagements, and this further increases Hatsumomo’s anger towards Chiyo. On the night of their planned escape, Chiyo attempts to sneak out but falls off the rooftop and is seriously injured. As punishment for dishonoring the okiya, Mother tells Chiyo that she won’t invest any more money in her geisha training. She also informs Chiyo that both her parents (Mako and Elizabeth Sung) are dead. Chiyo misses her chance to flee and never sees Satsu again. She is also demoted from geisha training to working as a slave to pay off her increasing debts to Mother.
One day, while crying on a riverbank, Chiyo is noticed by the Chairman (Ken Watanabe) and his geisha companions. He buys her a shaved ice dessert and gives her his handkerchief with some money in it. Inspired by his act of kindness, Chiyo resolves to become a geisha so that she may one day become a part of the Chairman’s life.