Paula Power, the daughter of a wealthy railway magnate, inherits De Stancy Castle, an ancient castle in need of modernization. She commissions a young architect from London, George Somerset, to undertake the work. Somerset falls in love with Paula. But Paula, the Laodicean of the title, meaning a person who is lukewarm or halfhearted, is torn between George's admiration and that of Captain De Stancy, whose old-world romanticism contrasts with Somerset's forward-looking outlook.

Paula's vacillation in her romantic life is also reflected in her views about religion, politics, and social progress, a dilemma faced by people in the Victorian era as industrialization was beginning to greatly change their lives. Paula will have to decide between the two men, however, or risk losing them both.