In the summer of 1963, 17-year-old Frances "Baby" Houseman is vacationing with her parents, Dr. Jake and Marjorie Houseman, and her older sister Lisa at Kellerman's, an upscale Catskills resort in the Borscht Belt owned by Jake's sarcastic best friend Max. Exploring one night, Baby secretly observes Max instructing the waiters, all Ivy League students, to romance the guests' daughters, no matter how unattractive. Max also demeans the working class entertainment staff, including Johnny Castle, one of the dance instructors. Baby is attracted to Johnny and dances briefly with him after his kindhearted cousin, Billy, introduces them at a secret "dirty dancing" party for resort staff. Max's grandson Neil flirts with Baby in the meantime.

Baby learns Johnny's dance partner Penny is pregnant by Robbie, a waiter and womanizer who attends Yale School of Medicine and now has his eye on Lisa. When Robbie refuses to help Penny, Baby, without explaining why, borrows money from her father to pay for Penny's abortion. At first, Penny declines as it would cause her and Johnny to miss a performance at a nearby resort, costing them the season's salary, but Baby volunteers to stand in for Penny. During her dance sessions with Johnny, they develop a mutual attraction, and despite their failure to execute a climactic lift, Johnny and Baby's performance is successful.

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