When writing dialogue, you start a new paragraph every time a different character speaks. In a manuscript, every paragraph is indented. So yes, dialogue is indented.
Dialogue has many other formatting rules. Be sure to check our article How to Format Dialogue (with Examples) for all the details. For complete information about formatting manuscripts, you’ll want to visit our Proper Manuscript Format page.
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New writers often struggle to properly format dialogue. The rules are strict and different than prose, but easily mastered. Here is what you need to know.