Three-act structure splits a story into roughly the setup (Act 1), the escalating confrontation (Act 2), and the resolution (Act 3). The acts are hinged by turning points: the inciting incident launches the story, a midpoint shifts its direction, and the climax resolves the central tension.
It's a description, not a formula — most satisfying stories fall into this shape whether or not the writer planned it. Used loosely, it's a useful diagnostic for where a draft sags. (For applying structure without killing discovery, see how to outline a novel.)
Example
Act 1: a guarded ex-nurse takes one last job. Act 2: the job goes wrong and the stakes rise. Act 3: the lie her family is built on is exposed, and she chooses.
See also: How to outline a novel