Adapted from the novel by George Du Maurier, childhood friends meet again; but she is married. He is imprisoned for killing her husband, but they share dreams and the hereafter.
In a Paris suburb little Mimsey (Virginia Weidler) and Gogo (Dickie Moore) quarrel over lumber. Gogo's mother dies, and Mimsey gives him boards for a wagon. Gogo's uncle takes the reluctant Gogo away and calls him Peter Ibbetson.
In London years later Peter (Gary Cooper) tells blind Mr. Slade (Donald Meek) he wants to leave his architecture employment. Slade says he can see without eyes and tells Peter to visit Paris. At a museum Peter meets an English woman and takes her to his old house. Slade sends Peter to York to design additional stables; but he refuses to match the old ones. So the Duchess Mary (Ann Harding) dismisses him. Peter sends her a cartoon, and she tells her husband, the Duke of Towers (John Halliday) that Peter will build the stables her way. Peter oversees the building work, and Towers rides a new colt. The Duchess admits the stables were built his way. She and Peter discover they were in the same dream about horses in a storm. Towers ask Peter how long he has been in love with his wife and if it has gone beyond a kiss. Peter tells how she helped him get over a little girl, and they realize they knew each other as children.
Mary tells her husband she will not see Peter again; but Peter tells her they are leaving now that they have found each other again. He says she forgot, but she shows him her little dress she kept. Peter kisses her, and her husband comes in. Mary says she loves Peter. When her husband aims a pistol, Peter throws a chair at him as he shoots. Towers is killed, and Peter is put in prison. Peter refuses to eat, and prisoners joke he can meet the Duchess after his life sentence. Peter resists guards and is clubbed. When he is dying, Mary tells him to take her hand in a dream and promises to send him a ring tomorrow. Men come to carry off Peter but find he is alive. Mary asks to visit him and is told he died. She gives a ring for the doctor to take to him. Dressed well, Peter walks out of the prison to Mary. They go to the garden. Peter builds a wagon, and they ride in it. They walk in nature and hear music. Peter shows her a castle; but lightning destroys it. After a storm they find each other and realize it was their fear. The doctor tells prisoner Peter he will live. Years later Mary is old; but when she and Peter meet in the forest, they are young. Old Peter calls Mary; but she died. He waits in the forest and hears her voice say they will be together forever.
This mystical film was acclaimed by surrealists and explores the deeper spiritual connections that transcend the physical world.