On a clear night with a full moon, Kiki leaves at midnight to find the town of Koriko where she can settle down and call it home. She intends on finding a city by the sea, so she travels south. Kiki takes her mothers broom and her father's radio as mementos. On the way, she hits a storm and stows away on a train. The next morning however, she is back in the sky with her cat, Jiji.
Once she arrived at the city, she meets Osono, a woman who owns a cozy bakery. Osono's customer had a baby that forgot her pacifier. Kiki offers to deliver it to the mother since Osono is clearly pregnant. When she returns, Osono is so moved and impressed, and Kiki delivers a letter from the mother saying that "Your new delivery girl is quite special." Osono invites Kiki inside where they talk over cocoa. Kiki tells Osono she is new to the city and doesn't have a home. Osono offers her a spare room in the attic. In return, they discuss Kiki's delivery service, where she can pick up and deliver baked goods for customers.
While delivering a package one day, she meets an artist, Ursula, who lives in the woods. Kiki has dropped the package she was supposed to deliver and Ursula doesn't let her have it back unless she scrubs her floors. Later, when Kiki finishes delivering the package, a city boy named Tombo catches site of her on his bike. Fascinated with her, he begins to pursue her. Kiki doesn't seem to like him much, but she nevertheless accepts his invitation to an aviation party. Before the party though, she has one final delivery to make.
She meets Madame, a rich, kind old woman who asks Kiki to deliver a herring and pumpkin pot pie to her niece's birthday. The pie isn't ready when Kiki arrives however, so she offers to help Madame finish it. While the pie is baking, Kiki also helps around the house, replacing light bulbs amongst other things. Suddenly, Kiki realizes the time and that she is going to be late for the party. Tombo is waiting for her at the bakery. Kiki delivers the pie to Madame's ungrateful niece who says she hates the pie. On the way back to the bakery, Kiki is caught in a storm and catches a fever. She skips the party and goes to bed, disturbed by the attitude of the elderly woman's niece.
The following day, Kiki makes a delivery to Tombo, who invites her inside and shows her his invention: a bike made to be a man-propelled plane. They try it out and laugh when it falls apart. Things seems to be going smoothly until Tombo's friends arrive, and Kiki notices one is the rude niece. Turned off, she storms off. By this time, due to her depression, Kiki becomes incapable of talking to her cat, Jiji, and she also loses the ability to fly. She feels like she is falling apart.
Days pass and Ursula shows up for a surprise visit. She invites a sad Kiki to stay in her cottage in the woods for a while. There, she determines that Kiki is facing a form of artist's block due to her unmet expectations of what her new life should have been life. If she can look inside herself and find her optimism and purpose, she will rediscover her powers and live contently. Realizing this and with her spirits back, she returns to the city.
Madame calls Kiki for another delivery, where she surprises Kiki with a chocolate cake made especially for her. Kiki is quite moved by this, but suddenly, there is a live news report on TV where an airship is crashing. Tombo is swept up into the crash and Kiki rushes to save him, immediately regainging her ability to fly when she pushed herself for her friend. After this event, Kiki is known throughout the city and liked by everyone for being a hero. She sends a letter to her parents telling them she is doing great and her delivery service is quite the success. She is homesick, but she loves Koriko and her newfound confidence. She is happy.