After a series of images of rushing water, forest, and dark, empty subterranean hallways, six-year-old Iris arrives in a coffin placed in the dormitory's common area, where she is met with curiosity by the other six girls of the house. After grooming and dressing her, they all exchange hair ribbons with each other – each girl gets the ribbons passed down from the girl a year above her. Iris, the new youngest "red ribbon", excites the ire of Selma, the former red ribbon, who complains about absence of the former violet-ribbon Natacha—the oldest who had been her friend. The new violet ribbon, Bianca, takes Iris under her wing. At first Iris is homesick, and believes that she will be reunited with her brother, but Bianca matter-of-factly tells her there is no possibility of that: there are no boys allowed. All of the girls in the school go swimming, and Iris quickly befriends Laura, the red-ribbon of another house. That night, much to Iris's dismay, Bianca leaves on an authorized mysterious errand that she cannot discuss. The next day, Iris has a routine day at the school – dance lessons, classroom time with animals, and recreation. The classes at the school are run by two young women: Mademoiselle Edith, who walks with a cane and teaches lessons, and Mademoiselle Eva, who teaches dance. Each house is cared for by an elderly serving woman; the girls whisper that all of the employees are girls who tried to escape the walled school in their youth, and were pressed into permanent service as punishment.
One night, Iris follows Bianca on her secret errand, but she loses track of the older girl once she reaches the main building. She explores, but only stumbles across more she does not understand: a shadowy man preparing an injection for a shadowy woman. She flees, and is lost in the woods for the night. After a period of smoldering animosity, Selma makes overtures to befriend Iris, but then beats her with a switch (stem) when Iris asks about Bianca's nightly departures. Selma also uses her fingertip, touching Iris's wound, to gingerly taste Iris's blood. As time passes, Laura, unlike Iris, is morose and unable to adapt to life at the school. With Iris's help – and a pledge of secrecy – she steals a rowboat in an attempt to escape, but drowns. A distressed Iris tells Bianca nonetheless. The school holds a funeral, where Laura's coffin is burned on a pyre.
As the year changes, the focus shifts to Alice, the fifth-year blue ribbon, who is hungry to leave the school and see the world outside. She has placed her hopes on winning the annual inspection of the blue ribbons, where the mysterious headmistress arrives from afar and after watching them dance, chooses one girl from the class to leave with her. Though Mademoiselle Edith cautions that she shouldn't get her hopes up, Alice has been anticipating this moment – and her own winning of the honor of leaving. Though the competition is close, another girl is chosen instead. Alice collapses at the headmistress's feet. She convalesces, but isn't the same as before: she doesn't speak, and aimlessly and perpetually stares into space. Finally, she runs away, and climbs the stone wall that surrounds the school. As we see her flee into the woods beyond, we hear the sound of distant gunshots and barking dogs. Later, as Eva looks pensively out a window, Edith informs her that Alice cannot be found; she then informs the group of girls that Alice is very bad, and will not be seen or spoken of again.
After Alice's escape, the focus turns to Bianca. The violet ribbons are told about the bodily changes that they will soon experience, and Bianca grows pensive. For the first time, she brings Nadja, the black-ribbon girl a year her junior. Together, they go to the main school building, and enter a secret passage behind the grandfather clock. There, the girls get into butterfly costumes, and prepare: each night they put on a recital for an audience. The next night, Nadia falters, but a man in the audience tells Bianca she is the most beautiful, and throws her a rose. After the show, Bianca and another girl explore the empty theater. They find an abandoned glove, and encounter one of the servants counting the performance's receipts—this, the girls are informed, is how the school makes its money. Bianca keeps the rose and the glove as a treasure, and fantasizes about the glove's touch, but casts them both into the water. Iris and Bianca spend the morning together on what Bianca explains will be her last day at the school. After a formal, tearful goodbye, she passes off her duties to Nadja. Bianca and the other violet ribbons put their ribbons in a box, and accompany Eva and Edith further down the hallway behind the clock than they've ever been before. There, they board a subway train, and leave the school. Eva smokes a cigarette. Back at the house, a new girl emerges from her coffin. The train arrives at a grand, modern plaza, and the girls are left by Eva and Edith. Bianca immediately begins playing in one of the fountains. A group of nearby teenage boys lose their ball in the fountain, and one wades in after it. Though he is obscured by the fountain's display, he fascinates Bianca. She splashes at him, and he splashes back. The film ends as it began, with a shot of rushing water.Zoé Auclair as Iris
Bérangère Haubruge as Bianca
Lea Bridaroslli as Alice
Marion Cotillard as Mademoiselle Eva
Hélène de Fougerolles as Mademoiselle Edith
Alison Lalieux as Selma
Astrid Homme as Rose
Ana Palomo-Diaz as Nadja
Olga Peytavi-Müller as Laura
Joséphine Van Wambeke as Vera
Corinne Marchand as La directrice
Sonia Petrovna as Assistant
In the 'extras' on the DVD release, the director relates that children playing unsupervised in nature (the forest, the pond) is a 'freeing' setting for them, an 'uncontrolled' environment to explore. Water is very important, as it is a highly visible medium in its many forms (including within or from underneath a surface), and it is necessary, sensual, and enjoyable, but also dangerous (the drowning), and evokes many emotions. Flowing water can also symbolize the passage of time. The dynamic of children relating to adults, not understating them or their actions, while seeing them as role models, is another dichotomy the director wanted to emphasize. Ambiguity and a 'dream-like' quality are also important elements of the film. She states they digitally enhanced or 'tweaked' colors in the film to 'non-realistic' tones, to achieve mood and lighting effect, particularly day for night shots. The director says she is not interested in explaining meaning: "... what I like in cinema is being lost. I like films I don't completely understand, so they stay with me longer after they're over," and, "I believe everyone can find their own stories within the film."
The film was well received by critics, winning five awards.