An updating of 1940 The Shop Around the Corner and the1949 musical version, In the Good Old Summertime, to the Internet Age, You've Got Mail follows the squabbling and romance of two competing book retailers on Manhattan's Upper West Side.Kathleen Kelly (Meg Ryan) awakens to the latest comments by her newspaper columnist boyfriend Frank Navasky (Greg Kinnear) on how computers are ushering in the fall of civilization. Once she has made quite sure Frank has left for the day, Kathleen starts her computer and goes on-line. She doesn't want Frank to know that she's exchanging e-mails with a man she's never met, Joe Fox (Tom Hanks). He is also keeping this a secret from his own girlfriend, publishing executive Patricia Eden (Parker Posey). Kathleen and Joe avoid discussing anything that might reveal their identities to each other, keeping to such subjects as pets, the changing seasons, and the charm of New York. They know each other only by their Internet handles "Shopgirl" and "NY152".Joe is an important executive in his family's business, Fox & Sons, a bookstore chain. Currently, he is readying a new "Superstore" (like a large Borders or Barnes & Noble). He has a bit of trouble attending to work rather than musing on Shopgirl's latest e-mail, but friend and subordinate Kevin (Dave Chappelle) finally gets him to focus. Joe says that although the locals won't think they want a big chain store, he knows he can seduce them with discount prices and cappuccino. Joe decides it's time to put up signs announcing that the Superstore is coming.Meanwhile, Kathleen starts a new day at her charming little children's bookstore, "The Shop Around the Corner", a long-time local landmark. She has doubts about her on-line relationship and discusses with cyber-savvy employee Christina (Heather Burns) whether it counts as cheating on Frank. Ultimately, she decides there's no real problem because "It's nothing."At Fox Books corporate HQ, Joe reports on the new store's progress and potential competition (including The Shop Around the Corner) to his father (Dabney Coleman) and grandfather (John Randolph). The latter revels that Kathleen's store was founded by her mother, with whom he had briefly exchanged letters and found her "enchanting". Another piece of news: Joe's father is planning to marry his taste-challenged girlfriend Gillian (Cara Seymour), the mother of his four-year old son Matt (Jeffrey Scaperrotta). This becomes another item to share in an e-mail to Shopgirl, who responds with anecdotes of her own.Kathleen's employees are dismayed to see the "Fox Books Superstore coming soon" sign on a building only half a block from The Shop Around the Corner. However, Kathleen is confident that her store's vastly superior service will prevent this from damaging her business. She ignores the ominous words from staffer George (Steve Zahn), "But they discount." Boyfriend Frank is quite supportive of Kathleen's optimistic assessment, but entirely oblivious to her uncertainties about whether running the store is really all she wants to do in her life. These are sentiments she can only share with NY152.One day, Joe is left in charge of his half-brother Matt and his Aunt Annabel (Hallee Hirsh), who is Joe's grandfather's ten-year-old daughter. In search of ways to keep them entertained, he takes them to a reading at The Shop Around the Corner, where he finally meets Kathleen in person. Joe is determined not to spoil a pleasant encounter by revealing that he's her competitor. The kids seem determined to spill the beans (Matt shows off the only word he can spell - FOX), but Joe laughs this off, manages to change the subject, and leaves with his secret intact. Still unknown to either of them is the bigger secret that they are each other's e-mail correspondents.The Superstore finally opens and is a big hit. The effect on Kathleen's sales is immediate and sharp. She claims this is just because the Fox store is new and that things will soon be back to normal, but she seems to be trying to convince herself. She and Frank attend an author friend's party, where she runs into Joe. He tries to preserve his anonymity, but is soon unmasked. His earlier attempts at secrecy now completely backfire, as Kathleen is convinced that Joe was spying on her. Her accusations, and her apparent contempt for big stores like Joe's, provoke him to belittle her shop as "insignificant but full of its own virtue." Late that night, Joe has trouble sleeping because he regrets some of the nasty things he said to Kathleen, but he can only reveal this to his confidante, Shopgirl. She admires his ability to come up with deflating comments on the spot, something she's never been able to do. From this point on, relations between Kathleen and Joe become icy, and they usually avoid acknowledging each other when they happen to meet, which occurs surprisingly often.After further discussion with longtime friend and store bookkeeper Birdie (Jean Stapleton), Kathleen admits that the problems at her store aren't going to solve themselves, and writes to NY152 for advice. Since she won't reveal to him that she's in the book business, he gives her general business advice summed up in the Godfather quote "Go to the mattresses". He explains this as meaning "Fight to the death" and also gives her his mantra "It's not personal, it's business". Kathleen accepts this advice and starts an anti-Fox Books campaign, including media coverage, a neighborhood rally, and picketing at the Superstore. This, particularly Kathleen's TV interview where she twists some of his words to suit her purposes, is aggravating to Joe, but ultimately doesn't have any impact on her sales problem.Finally, Kathleen decides that to get the support she needs in this crisis, she should meet NY152 in person. The on-line friends, still not exchanging names, arrange to meet at Cafe Lalo. Joe brings Kevin along and has him check out who's there (with the agreed upon identifier, a book with a rose). Kevin recognizes Kathleen from her TV interview and lets Joe know. Resenting that Shopgirl turns out to be someone he dislikes, he threatens to leave, but finally enters the cafe. However, rather than revealing that he's NY152, he pretends he has again merely bumped into her. He makes cynical comments about her book, Pride and Prejudice, and the fact that someone has apparently stood her up. As their arguing progresses, Kathleen finally comes up with a dig that succeeds in hurting Joe, "You are nothing but a suit". He leaves, and at first seems unwilling to continue their on-line exchanges. After he reads an e-mail expressing how she values NY152, plus her regrets for being cruel to the unpleasant person who was there instead of him, he resumes the correspondence.Changes in the characters' lives quickly follow. Kathleen decides to close her store. She and Frank admit they aren't in love, and part amicably. Joe has an epiphany on a stuck elevator and leaves Patricia, moving to his boat. Although it involves no immediate financial hardship, the store closing is painful for Kathleen, as it ends a connection she had to her mother. Joe's dad breaks up with Gillian, who has started a relationship with Matt's nanny (Katie Finneran). While discussing this with Joe, he mocks the notion of ever finding "the one person who fills you with true joy" - at which Joe appears to come to a realization.Still not revealing that he's NY152, Joe makes a concerted effort to become friends with Kathleen. He brings her flowers when she has a cold and accepts her criticism of his "It's not personal, it's business" philosophy. When she reveals that she only knows the man she was expecting at Cafe Lalo from e-mail, he encourages her to meet him. Joe gently stops Kathleen as she's about to make a crack he knows she'll later regret, and they are both surprised by the intimacy of the moment. On following days, he manages to spend more time with her, showing that he can be amusing and supportive. Kathleen mentions that she is making progress as a children's author and that NY152 had given her the idea to try. One day, she tells Joe that she in finally going to meet NY152 later that afternoon. Joe expresses his regrets about the hostility at the beginning of their relationship, and says if it hadn't been for this, he would have asked her out "for as long as we both shall live". Kathleen is moved, but has to leave for her rendezvous. This time there are no tricks, and when she sees Joe and realizes what this means, she tells him "I wanted it to be you." They kiss - a bit awkwardly at first, but then with conviction.