The book opens with Nick Carraway, the novel's narrator, introducing himself. He describes his background, his education at Yale and his sense of what he calls moral justice. The reader learns that the events of the novel took place a year earlier and that Nick is recalling them from his memory.
The narrative begins when Nick moves from his home in the Midwest to the fictional West Egg on Long Island, where he rents a small house next door to a large Gothic mansion. Nick has moved there looking for excitement and hopes to make a career as a bond trader.
West Egg is considered unfashionable because it is home to people with “new money”, whose wealth comes from recent success in trade or shares and who consequently have no traditional social connections. Nick discovers that his neighbor is a mysterious millionaire called Gatsby; he knows nothing about Gatsby except that he throws lavish parties every Saturday night.
On the other side of the bay is the more fashionable East Egg, where the more traditionally conservative and aristocratic rich families live. Nick has connections in East Egg, as it is where his cousin Daisy lives with her husband, Tom Buchanan. Nick goes for dinner at the couple's house and meets Tom, a powerful-looking man. He is also introduced to Jordan Baker, a beautiful young woman who is a keen golfer and who often looks distant and bored.
Tom runs out to take a phone call, and Jordan tells Nick that it is Tom's lover. Nick returns home, and when he arrives, he sees his neighbor standing in his garden and stretching his arms out towards the water. Nick looks out, but he can only see a green light marking the end of a dock on the other side of the bay.
Chapter II opens with a description of the valley of ashes, a gray wasteland between New York and West Egg. The area is watched over by the large disembodied eyes of Dr T J Eckleburg, which stare down from an old billboard poster advertising the services of an optician. One day Tom takes Nick to the valley of ashes on their way in to New York, where they visit George Wilson's garage. It turns out that Tom is having an affair with George's wife Myrtle.
Tom takes Nick and Myrtle into New York, where he keeps an apartment in which to have his affair. Joined by Myrtle's sister and another couple called the McKees, they have a party which soon turns drunken and unpleasant. Nick is disgusted by the behavior of the guests and tries to leave, despite being very drunk himself, but he is somehow fascinated by their vulgarity.
Tom gives Myrtle a puppy as a gift, and Myrtle becomes increasingly outspoken. She starts talking about Daisy and when Tom tells her not to, she becomes angry and begins saying Daisy's name over and over again. In a fit of rage, Tom breaks Myrtle's nose.
Very drunk, Nick leaves the party to help Mr McKee home and then takes the train back to West Egg at fo...