In the year 1914, a young girl named Sara Crewe, portrayed by Liesel Matthews, enjoys a privileged life in India with her widowed father, Captain Ralph Crewe, played by Liam Cunningham. As a soldier in the British Army, Captain Crewe immerses Sara in the rich tapestry of Indian culture, where she learns cherished stories and folklore from a local woman, Maya. Inspired by these tales, her guiding principle becomes the belief that "all women are princesses." However, the onset of World War I disrupts their idyllic life, compelling Captain Crewe to return to military service and subsequently enroll Sara in Miss Minchin's School for Girls, a boarding school in New York City, a drastic change for the young girl who must now leave behind her father and the life she knew.
As they voyage across the ocean to America, Sara's heart feels heavy with the thought of separation from her beloved father. Yet, he eases her fears by gifting her a heart-shaped locket, a precious heirloom that once belonged to Sara's mother, its delicate interior housing pictures of her parents. This locket becomes a symbol of her family's love, cherished amidst her changing circumstances. Upon arriving in the vibrant, bustling city of New York, she and her father are greeted warmly by Amelia Minchin, the headmistress's sister, who, despite her cheerful demeanor, serves as a stark contrast to the school's stern director, Miss Maria Minchin, acted by Eleanor Bron.
Miss Minchin, while feigning warmth to exploit Captain Crewe's wealth, swiftly demonstrates her coldheartedness as she introduces them to the school's strict environment. Captain Crewe has spared no expense for Sara, ensuring she enjoys the finest accommodations and possessions; however, this prompts the envious ire of Miss Minchin when she discovers the locket around Sara’s neck. A confrontation ensues, as Miss Minchin insists that jewelry is against school policy, yet Sara firmly stands her ground, valuing her mother's locket above all.
In an emotional farewell, Captain Crewe gives Sara a new doll, named Emily, which he calls a magical messenger to bridge the distance between them while he is stationed at war. His encouragement to embrace the magic of belief resonates deeply with her, and as Sara waves goodbye from her window, she clutches Emily tightly, imbued with hope and affection.
However, settling into her new life proves to be a rocky road. The rigors of the boarding school routine confound her. Sara finds herself late for breakfast and distracted by nostalgia for her mother, which only earns her further disdain from Miss Minchin, who promptly judges her as willful and spoiled. When her French teacher praises her fluency, it stings Miss Minchin's pride, further escalating tension within the school. Amidst her struggles, Sara unexpectedly forms a heartwarming bond with her fellow student, Ermengarde, a girl who suffers cruel treatment from the school's hierarchy. She also befriends Becky, a servant girl who endures her hardships silently.
Despite being told to avoid Becky, Sara is drawn to her plight. When she secretly visits Becky in the attic, the girl is astonished by the condition in which Becky lives and decides to show her kindness by leaving a note and a pair of warm slippers for her. As time progresses, Sara's rich storytelling captivates all her classmates, and they secretly gather in her room at night to hear her enchanting tales of Indian folklore.
Yet, as the weight of missing her father descends upon her, Sara struggles to maintain her sense of magic. The joy of birthdays quickly turns to despair when she learns of Captain Crewe's fate—he is presumed dead, and with his death, his fortune is seized by the government and Miss Minchin's desperate, harsh treatment begins. Stripped of her status, Sara must navigate a daunting life as a servant in the very school that once embraced her.
Though the friends she once dined with now sit in judgment alongside Miss Minchin, Sara's spirits are buoyed by her friendships with both Becky and Ermengarde. Together they wield their imaginations to transport them beyond their grim reality, sharing dreams of food and comfort, even in the bleak confines of the attic. Meanwhile, they hatch a plan to reclaim Sara's treasured locket, a quest that symbolizes hope as they sneak into Miss Minchin’s office.
As Sara faces hardships with grace, she inadvertently gathers the camaraderie of her fellow students. They work together, navigating challenges and even pulling unexpected pranks on Miss Minchin—a lighthearted rebellion against authority. In parallel, the observant Mr. Randolph, played by Arthur Malet, captures Sara's attention as he grapples with his own grief over his son, who is also at war.
Through the intertwining of their lives, Sara learns the value of compassion and kindness. She gifts her lunch to a hungry mother and her children, earning the label of "princess" for her selflessness. Yet, just as she begins to find small comforts, Miss Minchin’s oppressive demeanor escalates as she realizes Sara’s friends are aiding her.
A thunderstorm sets the stage for Sara and Becky to plan a clandestine escape. Driven by desperation, Sara ventures across a precarious ledge connecting her attic room to Mr. Randolph's home, only to find herself steadfastly pursued by Miss Minchin and the police. A fateful encounter in the Randolph house reveals the heartwarming truth: Captain Crewe is alive, yet he doesn’t remember Sara. With the help of Ram Dass, Mr. Randolph's manservant, and Sara's unyielding spirit, her father’s memory slowly resurfaces amidst the chaos, leading to a joyful reunion filled with relief and love.
In the aftermath, Sara and Becky prepare to return to India, but not without touching the hearts of her friends at Miss Minchin’s school, who bid them a bittersweet farewell, transformed by the strength of Sara’s compassion and unwavering belief in the magic of hope. Ultimately, Miss Minchin meets a fitting fate for her earlier cruelties, serving as a lesson in humanity and the triumph of the spirit that can mend the harshest of realities.
