In Victorian England, the story revolves around Cedric Brown, a widowed undertaker struggling to manage his seven spirited children: Simon, Tora, Eric, Lily, Sebastian, Christianna ("Chrissie"), and baby Agatha ("Aggie"). Although Cedric is affectionate and well-meaning, his clumsiness and the shadow of his late wife's absence have left him ill-equipped to handle the family's chaos.
The mischievous children have seen off numerous nannies with their relentless pranks, and they take delight in tormenting Mrs. Blatherwick, their former military cook, who ominously claims there will be "snow in August" before the household finds peace. The only person who seems to command their respect is Evangeline, the family's kind-hearted yet illiterate scullery maid.
One fateful night, as a storm rages on, Cedric stumbles upon references to a "Nanny McPhee" scattered throughout the house. When chaos ensues in the kitchen, a hideous woman appears at the door, introducing herself as Nanny McPhee.
With her unique blend of discipline and magical powers, she begins to transform the lives of Cedric and his children. Despite their attempts to outsmart her, the children gradually learn to respect her wisdom. Each lesson they grasp magically erases one of Nanny McPhee's facial blemishes, symbolizing their growth and newfound responsibility. As the children become more helpful, they ease their father’s burdens, making her presence less essential.
The family's financial stability hinges on the domineering figure of Lady Adelaide Stitch, Cedric's late wife's aunt, who threatens to take one of the children into her custody. Initially targeting Chrissie, she reluctantly agrees to take Evangeline instead when the maid volunteers, mistakenly believing she is one of the daughters. Additionally, she pressures Cedric to remarry within the month or risk poverty.
In desperation, Cedric turns to the unpleasant widow Mrs. Selma Quickly. Guided by their fairy tale beliefs, the children fear Mrs. Quickly will treat them poorly, so they conspire to sabotage her visit, leaving her furious.
After learning the true reasons behind their father’s intentions, the children own up to their wrongdoing and reconcile with Mrs. Quickly, who becomes intrigued by the idea of being with a wealthy man. However, the marriage is complicated when she cruelly breaks Aggie’s cherished rattle, an item that once belonged to their late mother.
During the lavish wedding, chaos erupts when the children pretend there are bees and spark a food fight, prompting Cedric to realize that his children disapprove of Mrs. Quickly. Recognizing that she isn’t the right choice for his family, he joins the fray, leading to her storming off and canceling the wedding.
As Lady Adelaide’s ultimatum looms, Lily suggests that Cedric marry Evangeline. The children reveal to Adelaide that Evangeline isn’t actually their sister, and despite initial hesitation, both Cedric and Evangeline acknowledge their feelings and agree to marry. This twist satisfies Adelaide’s conditions while leaving her in shock at the thought of Cedric marrying a servant.
In a magical moment, Nanny McPhee, now fully transformed, conjures up snow in August, turning a chaotic wedding into a breathtaking winter celebration and granting Evangeline a stunning wedding dress. After restoring the beloved rattle, she discreetly departs as she had promised the children, saying, > "When you need me, but do not want me, then I must stay. When you want me, but no longer need me, then I have to go."
