19-year-old Marius tends his father's bar on Marseilles' waterfront, but dreams of going to the sea. His father Cesar's life revolves around two things, his belief that Marius will take over the bar one day, and the good times he has playing tricks and card games with his cronies, one of them a rich sailmaker named Panisse. Marius' childhood playmate and young love is Fanny, who has just turned 18. Fanny works for her mother, Honorine, a fish-seller, but dreams of soon becoming Marius' wife. But Panisse, recently widowed and lonely, has noticed Fanny and he asks to speak to her mother, who mistakenly assumes that SHE is the one he's after. When she realizes it is Fanny he wants to propose to, she is reconciled to the idea because Panisse can offer them financial security.
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Marius is of course furious at the attention Panisse pays to Fanny, but he has made secret plans to steal off to sea for five years aboard a vessel destined for scientific research. But the night before he leaves, he and Fanny meet. Marius tells Fanny he is going away and she can hardly bear it. They then make love as Fanny's mother is away on a trip. Honorine returns in the morning to discover them together, rushes over to Cesar and the two make plans to marry off Fanny and Marius right away. Marius loves Fanny and is ready, but when he hears the ship's horns, his longing to be away is obvious to Fanny. Furthermore, Marius' crazy friend, known only as the Admiral, tells Fanny cruelly that Marius will come to hate her for making him give up his dream. So Fanny makes Marius believe that she's had second thoughts about getting tied down. Hurt that their night together hasn't seemed to mean as much to Fanny as it did to him, Marius leaves for the sea.
Cesar is crushed and he wants to forget Marius, but he and Fanny eagerly await all of Marius' letters. Then Fanny discovers she is pregnant, but refuses to send word to Marius. The kind Panisse steps in as her savior by offering to marry her and promising that her child will have everything. Panisse is the last of his line and his whole family had given up hope for an heir. When Cesar learns that his grandbaby will be Panisse's, he initially objects, but sees how the plan will take care of Fanny and how he, as the baby's godfather, will have every privilege in raising the child. After the wedding, Panisse, his family, Honorine and Cesar are thrilled when Fanny finally gives birth to a baby boy named Cesario, after his godfather.
When Cesario turns one, Marius unexpectedly returns as his ship is temporarily near Marseilles. He visits Fanny to see how she is and learns of Cesario. He realizes he must be the boy's father and weeps for abandoning Fanny. Cesar shows up and tells him he must make the best of the situation, for Panisse may let Fanny go, but not Cesario, and without Cesario, Fanny would never leave Panisse. Fanny tells Marius she's never stopped loving him, but he must go away, and he does.
By the time Cesario is turning five (six?), he also has a love for the sea, just like Marius, and his grandmother Honorine (who has been Panisse's business manager since Fanny's marriage) has taken him to visit the old waterfront of Marseilles. She visits her old friends and loses track of Cesario, who is spotted by the Admiral and taken to Marius, who has told no one of his return. Marius has been working as a mechanic in a garage, but weary of living on the outskirts of his former life, is about to sail for America in another day. When he sees Cesario, he is overjoyed. Having often heard of Marius from his godfather and mother, Cesario loves him at once and invites him to his birthday party. Fanny, searching the waterfront for Cesario, learns where the Admiral has taken him and eventually meets up with Cesario and Marius. She is still in love with Marius, but again does not wish to stop him. However, she has news for Marius that Panisse is dying. The already failing Panisse was struck very hard after hearing that Cesario was lost, and he is on his deathbed.