A mute Scotswoman named Ada McGrath is sold by her father into marriage to a New Zealand frontiersman named Alisdair Stewart, bringing her young daughter Flora with her. Ada has not spoken a word since she was six and no one, including herself, knows why. She expresses herself through her piano playing and through sign language, for which her daughter has served as the interpreter. Flora, it is later learned, is the product of a relationship with a teacher with whom Ada believed she could communicate through her mind, but who "became frightened and stopped listening", and thus left her.
Ada, Flora, and their belongings, including a hand crafted piano, are deposited on a New Zealand beach by a ship's crew. The following day, the husband who has bought her, Alisdair, arrives with a Māori crew and his white friend, Baines, a fellow forester and retired sailor who has adopted many of the Maori customs, including tattooing his face. Alisdair tells Ada that there is no room in his small house for the piano and abandons the piano on the beach. Ada, in turn, is cold to him and is determined to be reunited with her piano. Unable to communicate with Alisdair, Ada and Flora visit Baines with a note asking to be taken to the piano. He explains that he cannot read. Baines soon suggests that Alisdair trade the instrument to him for some land. Alisdair consents, and agrees to his further request to receive lessons from Ada, oblivious to his attraction to her. Ada is enraged when she learns that Alisdair has traded away her precious piano without consulting her. During one visit, Baines proposes that Ada can earn her piano back at a rate of one piano key per "lesson", provided that he can observe her and do "things he likes" while she plays. She agrees, but negotiates for a number of lessons equal to the number of black keys only. While Ada and her husband Alisdair have had no sexual, nor even mildly affectionate, interaction, the lessons with Baines become a slow seduction for her affection. Baines requests gradually increased intimacy in exchange for greater numbers of keys. Ada reluctantly accepts but does not give herself to him the way he desires. Realizing that she only does what she has to in order to regain the piano, and that she has no romantic feelings for him, Baines gives up and simply returns the piano to Ada, saying that their arrangement "is making you a whore, and me wretched", and that what he really wants is for her to actually care for him.
Despite Ada having her piano back, she ultimately finds herself missing Baines watching her as she plays. She returns to him one afternoon, where they submit to their desire for one another. Alisdair, having become suspicious of their relationship, hears them having sex as he walks by Baines' house, and then watches them through a crack in the wall. Outraged, he follows her the next day and confronts her in the forest, where he attempts to force himself on her, despite her intense resistance. He eventually exacts a promise from Ada that she will not see Baines.
Soon afterwards, Ada sends her daughter with a package for Baines, containing a single piano key with an inscribed love declaration reading "Dear George you have my heart Ada McGrath". Flora does not want to deliver the package and brings the piano key instead to Alisdair. After reading the love note burnt onto the piano key, Alisdair furiously returns home with an ax and cuts off Ada's index finger to deprive her of the ability to play the piano. He then sends Flora who witnessed this to Baines with the severed finger wrapped in cloth, with the message that if Baines ever attempts to see Ada again, he will chop off more fingers. Later that night, while touching Ada in her sleep, Alisdair hears what he believes to be Ada's voice inside of his head, asking him to let Baines take her away. Deeply shaken, he goes to Baines' house and asks if she has ever spoken words to him. Baines assures him she has not. Ultimately, it is assumed that he decides to send Ada and Flora away with Baines and dissolve their marriage once she has recovered from her injuries. They depart from the same beach on which she first landed in New Zealand. While being rowed to the ship with her baggage and Ada's piano tied onto a Māori longboat, Ada asks Baines to throw the piano overboard. As it sinks, she deliberately tangles her foot in the rope trailing after it. She is pulled overboard but, deep under water, changes her mind and kicks free and is pulled to safety.
In an epilogue, Ada describes her new life with Baines and Flora in Nelson, where she has started to give piano lessons in their new home, and her severed finger has been replaced with a silver finger made by Baines. Ada has also started to take speech lessons in order to learn how to speak again.
Casting the role of Ada was a difficult process. Sigourney Weaver was Campion's first choice, but she turned down the role because she was taking a break from film at the time. Jennifer Jason Leigh was also considered, but she could not meet with Campion to read the script because she was committed to shooting the film Rush (1991). Isabelle Huppert met with Jane Campion and had vintage period-style photographs taken of her as Ada, and later said she regretted not fighting for the role as Hunter did.
The casting for Flora occurred after Hunter had been selected for the part. They did a series of open auditions for girls age 9 to 13, focusing on girls who were small enough to be believable as Ada's daughter (as Holly Hunter is relatively short at 157 cm / 5' 2" tall). Anna Paquin ended up winning the role of Flora over 5,000 other girls.
Alistair Fox has argued that The Piano was significantly influenced by Jane Mander's The Story of a New Zealand River. Robert Macklin, an associate editor with The Canberra Times newspaper, has also written about the similarities. The film also serves as a retelling of the fairytale "Bluebeard", which is hinted at further in the inclusion of "Bluebeard" as a piece of the Christmas pageant.
In July 2013, Campion revealed that she originally intended for the main character to drown in the sea after going overboard after her piano.
Production on the film started in April 1992, filming began on 11 May 1992 and lasted until July 1992, and production officially ended on 22 December 1992.
Reviews for the film were overwhelmingly positive. Roger Ebert wrote: "The Piano is as peculiar and haunting as any film I've seen" and "It is one of those rare movies that is not just about a story, or some characters, but about a whole universe of feeling". Hal Hinson of The Washington Post called it "[An] evocative, powerful, extraordinarily beautiful film".
In his 2013 Movie Guide, Leonard Maltin gave the film 3 1/2 stars out of 4, calling the film a "Haunting, unpredictable tale of love and sex told from a woman's point of view" and went on to say "Writer-director Campion has fashioned a highly original fable, showing the tragedy and triumph erotic passion can bring to one's daily life". On the film site Rotten Tomatoes, The Piano earned a 90% "Certified Fresh" rating. On Metacritic, it holds a score of 89 out of 100, indicating "universal acclaim".
At the 1993 Cannes Film Festival, the film shared the Palme d'Or, with Chen Kaige's Farewell My Concubine, with Campion becoming the first woman to win the honour. Aside from being the first woman to win the highest Cannes honour, she was the first filmmaker from New Zealand to achieve this. Holly Hunter also received the Best Actress Award. In 1994, the film won three Academy Awards: Best Actress (Holly Hunter), Best Supporting Actress (Anna Paquin) and Best Original Screenplay (Jane Campion). Anna Paquin was the second youngest person (after Tatum O'Neal) to win an Academy Award.
The score for the film was written by Michael Nyman, and included the acclaimed piece "The Heart Asks Pleasure First"; additional pieces were "Big My Secret", "The Mood That Passes Through You", "Silver Fingered Fling", "Deep Sleep Playing" and "The Attraction of the Peddling Ankle". This album is rated in the top 100 soundtrack albums of all time and Nyman's work is regarded as a key voice in the film, which has a mute lead character (Entertainment Weekly, 12 October 2001, p. 44).
The film was released on DVD in 1997 by LIVE Entertainment and on Blu-ray on 31 January 2012 by Lionsgate, but already released in 2010 in Australia.