Olive Penderghast, portrayed by Emma Stone, fabricates a story about going on a date to avoid a camping trip with her best friend, Rhiannon Abernathy. Instead of enjoying the great outdoors, she spends her weekend at home, jamming to Natasha Bedingfield's catchy "Pocketful of Sunshine." When Rhiannon presses her for details on Monday, Olive concocts another lie, claiming she lost her virginity to a college student. This tall tale falls into the ears of Marianne Bryant, a devoutly religious girl played by Amanda Bynes, and quickly spirals out of control.
As the news spreads, Marianne's conservative church group sets their sights on Olive as their new project. Olive confides in her friend Brandon, who explains the bullying he faces for being gay. To help him gain acceptance, Olive reluctantly agrees to pretend to sleep with him, leading to an awkward yet impactful moment at a party. After a confrontation with Rhiannon regarding her newfound reputation as a "Dirty Skank," Olive decides to embrace this alter ego. She starts dressing more provocatively, sewing a red "A" onto her outfits that symbolize her supposed promiscuity.
With her bold new persona, Olive is approached by boys desperate to bolster their own reputations, offering her money to claim they’ve slept with her. However, things take a turn for the worse when Micah, Marianne’s much older boyfriend, gets chlamydia from an encounter with Mrs. Griffith, the school guidance counselor. Micah, seeking to dodge the blame, points fingers at Olive. Caught in the crossfire, she agrees to a lie to protect the marriage of her beloved teacher, Mr. Griffith.
Harassment from Marianne’s group intensifies, now including Rhiannon, as they aim to push Olive out of school. A disastrous date with Anson, who wants to pay her for genuine intimate relations, further complicates matters. In a twist of fate, Olive reconnects with her old crush, Todd, played by Penn Badgley, who stands by her, reminding her of a time she covered for him during his first kiss.
Desperate to clear her name, Olive implores those she once helped to speak the truth, but most, including Mrs. Griffith, refuse to do so, relishing their newfound popularity. Determined, Olive decides to confront the situation head-on. After a discussion with her quirky, supportive mother, Rosemary, she devises a plan. During a school pep rally, she performs an eye-catching song and dance number, broadcasting a heartfelt confession via webcam. Many of the boys whose social status she aided observe her bravery.
After the broadcast, Olive reaches out to Rhiannon to apologize for her deceit. As she concludes her confession, Todd surprises her by arriving on a lawnmower, and he asks her to join him outside. The pair share a kiss, and the story closes with them joyfully riding off together, a symbol of their newfound connection amidst the chaos.
