The story is set on a fictional Greek island, where Donna owns and handles a taverna. The taverna caters to the needs of locals as well as the tourists. Donna has a daughter Sophie who is engaged to Sky. Sophie has always been curious about her father but Donna never talks about the past.

Sophie comes upon her mother's old diary and sees entries in which Donna describes intimate dates with three men. Sophie thinks that one of these men is her father, and mails to each one an invitation to her wedding without letting her mother know. After getting the invitation the men arrive; "Head Banger" Bright, Bill Austin, and Sam Carmichael. Each person has a peculiar habit, Harry is a geeky British banker with a unique laugh; Bill is a typical Australian traveler; Sam is an American architect who had an affair with Donna while engaged to another woman. On the other hand Donna has also invited two of her old friends; Tanya, a rich three-time divorce´e, and Rosie, an unmarried woman who likes to have fun. Two decades ago the trio were the group called "Donna and the Dynamos."

Sophie after meeting Bill feels that he is her father as his aunt had left a legacy for the family. So Sophie requests Bill to give her away at the wedding, and he agrees. Before long Harry and Sam get to know what's going on, and each approaches Sophie. After talking to Sophie individually each of the three potential fathers now believes that he is giving Sophie away. Meanwhile Sophie has a change of heart, and sends a note to them saying that her mother is going to give her away instead. Moreover she and her fiance´e are pondering about their decision to marry, they feel that they do not know each other as well as they should. On the other hand Sam asks Donna about him being Sophie's dad. It results in an acrimonious showdown. During the fight it is reveled that Sam and Donna are still madly in love against their wills. At last it comes out in the open that Sophie's paternity is undetermined. Sophie and Sky declare that they have decided not to marry for the time being. Rather than allow the wedding plans go to waste, Donna and Sam bury their pride and get married instead. Rosie and Bill have become attracted to each other and Harry reveals that his 'other half' was a man. He was into a committed homosexual relationship.