Lucy Heartfilia is a 17-year-old celestial wizard who runs away from home to join Fairy Tail, a rambunctious wizards' guild whose members are famous for their overly destructive antics. Along the way, she meets Natsu Dragneel, a boy who is traveling the land of Fiore together with his partner Happy, a flying cat, in search of his foster parent, a dragon named Igneel who had disappeared seven years earlier. Lucy is soon abducted by a renegade wizard posing as the famous Salamander of Fairy Tail. Natsu rescues Lucy, revealing himself to be the real Salamander and a Dragon Slayer, a wizard with the abilities of a dragon. After defeating the imposter, Natsu allows Lucy to join Fairy Tail.

Lucy forms a team with Natsu and Happy, along with Gray Fullbuster, an ice wizard with a habit of accidentally stripping, and Erza Scarlet, an armored female wizard. They are tasked with completing missions requested by people and collect money for rewards, such as hunting monsters and fighting illegal guilds called dark guilds. Soon after, the rival guild Phantom Lord attacks Fairy Tail, resulting in a guild war. Fairy Tail defeats the rival guild, and Phantom Lord members Gajeel Redfox, a Dragon Slayer raised by the dragon Metalicana, and Juvia Lockser, a water wizard, join Fairy Tail. The guild also crosses paths with Jellal Fernandes, Erza's childhood friend who is being manipulated by Ultear Milkovich to revive the ancient dark wizard Zeref using the Tower of Heaven. Natsu defeats Jellal and the Tower of Heaven is destroyed. Later, Laxus Dreyar, the renegade grandson of the guild's master Makarov Dreyar, stages a battle royal in Fairy Tail and is expelled as a result.

Forming an alliance with the wizard guilds Blue Pegasus, Lamia Scale and Cait Shelter, Fairy Tail fights and defeats the dark guild Oración Seis with the help of a reformed Jellal, who is arrested for his previous crimes. Wendy Marvell, a Dragon Slayer raised by Grandine and the sole member of Cait Shelter, joins Fairy Tail along with her flying cat Carla. Lucy, Natsu and the others enter the alternate universe of Edolas when their guild vanishes due to Edolas' powers. The group encounters Faust, the universe's king who intends to bestow a limitless supply of magic for the universe. Happy also discovers his and Carla's heritage as Exceeds sent to Earthland as infants on the orders of their queen Chagot. Allying with the Exceeds and Faust's son Mystogan, Fairy Tail defeats Faust and restores their guild at the cost of Edolas' magical power being drained. The group returns to Earthland together with the Exceeds, one of which, Pantherlily, forms a partnership with Gajeel.

Later, several members of Fairy Tail, including Natsu, Lucy, and their allies, participate in an exam on their guild's sacred ground of Tenrou Island in which wizards can advance to a higher rank and thus take part in more dangerous missions. During the exam, the dark guild Grimoire Heart appears and seeks Zeref, who has been living on the island. Aided by a reformed Laxus, Fairy Tail defeats Grimoire Heart, and Zeref kills the guild's leaderHades. However, the incident summons the black dragon Acnologia, which attacks the island. The spirit of Fairy Tail's founding master, Mavis Vermilion, protects everyone on the island from Acnologia's assault with a defensive spell, freezing them in time.

Seven years later, the spell lifts and the returning members of Fairy Tail discover their guild to be the weakest in Fiore. The group participates in an annual tournament to decide the country's strongest guild called the Grand Magic Games. Also participating in the tournament are Sabertooth, the current strongest guild containing Dragon Slayers Sting Eucliffe and Rogue Cheney, and Raven Tail, a guild led by Makarov's resentful son Ivan. Meanwhile, Arcadios, a royal army captain, plans to open a magic gateway for Zeref by stealing the 12 Zodiac gatekeys.