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In 1900 Paris, Honoré Lachaille, elderly connoisseur of beauty and fashion, strolls through the Bois de Bologne, appreciating the splendor of youth personified by spirited school girl Gigi Alvarez. Later, Honoré meets his elegant nephew Gaston, the wealthy heir to a sugar empire, who declares his weariness at being the center of Paris society. To Honoré's surprise, Gaston admits the only place that he can relax is at the modest flat of Honoré `s former paramour, Mme. Alvarez, Gigi's grandmother and guardian. Meanwhile, at her weekly etiquette lessons with her regal great-aunt Alicia, Gigi struggles to stifle her natural buoyancy while learning about the intricacies of dining. When Gigi laments that she is never allowed to accept invitations and has no friends, Alicia explains that she is not to mingle with ordinary people who live ordinary lives. Gigi concedes she is aware that the women in her family are unusual in that they never marry, but remains puzzled by it. Alicia then advises Gigi of the importance of recognizing expensive jewelry and cautions her never to accept second-rate baubles or men. After showing Gigi how to distinguish fine cigars, Alicia reminds her niece that everything she is learning has a purpose and admonishes her to remember that love is an art. Confused about what eating, jewelry and tobacco have to do with art, Gigi heads home and runs into Gaston, who has been visiting Mme. Alvarez. Delighted by Gigi's guileless nature, Gaston invites her for a glasé at the skating rink, where his current lover, Liane d'Exelmans, is taking skating lessons. Gigi startles Gaston when she declares that she finds Liane common and coarse. That evening while dining with Liane and Honoré at Maxim's restaurant, Gaston realizes that despite Liane's effusive attentions, her thoughts are elsewhere. The next morning Gaston tells Honoré that he is deeply insulted to have learned from private detectives that Liane is secretly seeing her skating instructor. When Gaston hints that he will end his relationship with Liane through a note, Honoré insists that the break-up must be in keeping with Gaston's stylish reputation. Taking Gaston's brand new automobile, the two men follow Liane to Honfleur where Gaston pays the skating instructor to leave Liane, then rebukes her in a restaurant and declares their association over. Honoré then encourages Gaston to attend all of the upcoming fashionable parties in order to show that the break-up has had no effect on him. Gigi and her grandmother follow Gaston's subsequent revelries through the society newspaper columns and several weeks pass before he visits them again. Arriving one evening bearing chocolates and champagne, Gaston reveals that he will soon be going to Trouville-by-the-Sea. After Mme. Alvarez convinces Gaston to pass up a party with two hundred guests at the Eiffel Tower, Gigi offers to play cards with him and bets that if Gaston loses he must take her and her grandmother to Trouville. When Gigi wins the game, Gaston gallantly agrees to fulfill his part of the wager, despite Mme. Alvarez's protests, and admits that he has more fun with Gigi than anyone else. At Trouville, Gaston accompanies the exuberant Gigi on the beach, playing tennis and riding burros. Honoré, who has also come to the seaside, is startled to find Mme. Alvarez and the two reminisce about their romantic past. Upon returning to Paris, Mme. Alvarez is summoned by Alicia, who scolds her for accepting Gaston's invitation to Trouville when Gigi has not been properly prepared. Aghast at the suggestion that Gigi is old enough to be groomed for a romantic alliance with Gaston, Mme. Alvarez nevertheless reluctantly accepts her sister's advice. While Gaston is away resting in Monte Carlo, Gigi visits Alicia's daily, but her great-aunt is discouraged that Gigi remains too immature to appreciate her lessons. Although Gigi is ill at ease in the flattering gowns purchased for her by Alicia, when Gaston returns she tries one on for him. Gaston is so outraged by Gigi's unexpected grown-up transformation that he storms out of the flat, only to return moments later to ask Gigi to tea at the swank Reservoir club. Mme. Alvarez forbids it, and in private tells Gaston that if Gigi is to be seen in society spots with him, they must have a formal understanding. Infuriated by the idea, Gaston departs, angrily walking the streets berating Gigi as a mere child until he realizes that she is indeed becoming a young lady. Gaston returns to the Alvarez flat and presents an offer to Mme. Alvarez, who in turn seeks approval from Alicia. After Alicia consents to the terms for Gaston to formally take up with Gigi, the women agree that for the time being Gigi will not be told of the arrangement. Later, Gaston drops by the flat with flowers for Gigi and an invitation to dinner. When Gaston attempts to explain the change in their relationship to Gigi, he is stunned when she flatly refuses him. Gigi reveals that she understands that she is now to be Gaston's lover and she is also aware that when he becomes tired of her she will be expected to go on to another man. Gigi concludes that it is not in her nature to live this way. Shocked at her frankness, Gaston is embarrassed, but Gigi points out that he was not embarrassed to make the arrangements for her to become his mistress with Mme. Alvarez. Gigi then confesses her wish that she and Gaston could go on as they have in the past, but Gaston declares they cannot because he loves her. Stunned, Gigi berates him for wanting her as a mistress if he truly cares for her and flees to her room. Confused and angry, Gaston scolds Mme. Alvarez for bringing Gigi up improperly and departs. While Gaston meets with Honoré to complain about the situation, Mme. Alvarez telephones Alicia with the news. Horrified, Alicia leaves her apartment for the first time in years to come to her sister's flat. The women are surprised when Gaston arrives, having received a note from Gigi. To Alicia's relief, Gigi tells Gaston that she would rather be unhappy with him than without him and agrees to the arrangement. Although unsure about the undertaking, Gigi, beautifully dressed, accompanies Gaston to join the society crowd at Maxim's. Using all of Alicia's tips, Gigi plays the perfect companion, which unsettles Gaston, who nevertheless presents her with a beautiful emerald bracelet. When Honoré congratulates Gaston for finding so young a companion who will keep him happy for many months, Gaston abruptly takes Gigi home without a word. Gaston then walks the streets of Paris in a state on confusion until he comes to a sudden realization and, returning to the flat, asks Mme. Alvarez for the honor of Gigi's hand in marriage.