The film centers on the family of Tevye, a Jewish milkman in the village of Anatevka (probably in the Pale of Settlement) in Tsarist Russia. Tevye breaks the fourth wall by talking at times directly to the audience or to the heavens (to God) for the audience's benefit. Much of the story is also told in musical form. Tevye is terribly poor despite working hard, as are most of the Jews in Anatevka. He and his wife, Golde, have five daughters, which is another burden for Tevye to shoulder (as he cannot afford a dowry to marry them off). Life in the shtetl of Anatevka is very hard and Tevye speaks not only of the difficulties of being poor but also of the Jewish community's constant fear of harassment from their non-Jewish neighbors. The film begins with Tevye explaining to the audience that what keeps the Jews of Anatevka going is the balance they achieve through obedience to their ancient traditions. He also explains that the lot of the Jews in Russia is as precarious as a fiddler on a roof: trying to eke out a pleasant tune while not breaking their necks. The fiddler appears throughout the film as a metaphoric reminder of the Jews' ever-present fears and danger. While in town, Tevye meets Perchik, a student with modern religious and political ideas (he is clearly a Marxist). Tevye invites Perchik to live with him and his family in exchange for Perchick tutoring his daughters.

Through Yente the matchmaker, Tevye arranges for his oldest daughter, Tzeitel, to marry the only wealthy Jewish man in Anatevka, Lazar Wolf the butcher. However, Tzeitel is in love with her childhood sweetheart, Motel the tailor, and begs her father not to make her marry the much older butcher. Tevye reluctantly agrees and, despite the humiliation suffered by Lazar Wolf, Tzeitel and Motel arrange to be married. At the wedding, an argument breaks out between the guests over whether a girl should be able to choose her own husband. Perchik addresses the crowd and says that since they love each other it should be left for the couple to decide. He creates further controversy when he asks Tevye's daughter Hodel to dance with him, crossing the barrier between the men and women. Eventually, the crowd warms up to the idea and the wedding proceeds with great joy. Suddenly, a mob of local peasants arrive and begin a pogrom, attacking the Jews and their property. Later, as Perchik prepares to leave Anatevka to work for the revolution, he tells Hodel that he loves her, and she agrees to marry him. When they tell Tevye, he is furious that they have decided to marry without his permission, and with Perchik leaving Anatevka, but he eventually relents because they love each other. Weeks later, when Perchik is arrested in Kiev and exiled to Siberia, Hodel decides to travel to join him there. Meanwhile, Tevye's third daughter, Chava, has been flirting with a young Russian man, Fyedka, and eventually works up the courage to ask Tevye to allow her to marry him. In a soliloquy, Tevye concludes that while he could accept his older daughters' choosing their own husbands, he cannot countenance Chava marrying a non-Jew, in effect abandoning the Jewish faith, and forbids her to associate with him, but she elopes with him and marries in a Russian Orthodox Church. Finally, the Jews of Anatevka are notified that the Russian government will force the Jews to leave the village; they have three days to pack up and leave. Tevye and his family and friends begin packing up to leave, heading variously for New York, Chicago, Palestine, and other places they know nothing about. Just before the credits, Tevye spots the fiddler and motions to him to come along. The film ends with a long, slow shot of the Jews walking out of their former village at sunset.

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