Matilda Wormwood is a young girl who is extraordinarily brilliant. At a young age, she can solve complex math problems in her head and read books meant for adults. Unfortunately, though, Matilda has grown up with parents who do not give her the attention and love she deserves. Mr. and Mrs. Wormwood and their son, Michael, are quite different from Matilda, preferring to watch television than read books. They do not understand her, and often treat her badly.
Rather than feel hopeless, Matilda plays tricks on her family to get back at them for the way they treat her, replacing her father's hair tonic with platinum hair dye and using a parrot to convince them that their house is haunted. These tricks give Matilda some agency, and distract her parents from mistreating her.
Matilda starts school late for a girl her age, and is placed in the lowest form in Crunchem Hall Primary School. Matilda's teacher, Miss Honey, is a wonderful, sweet woman, and she immediately recognizes Matilda's intelligence and seeks to move her into the highest form, where she can maximize her potential. Unfortunately, though, Crunchem Hall is run by a terrible woman named Miss Trunchbull. She is massive and muscular, having been a former Olympic athlete for Britain. She absolutely loathes children and treats the students horribly, keeping them in line with terrible punishments such as the "Chokey," a thin closet with walls made of nails where students have to stand straight up for hours when they misbehave.
Miss Trunchbull will not move Matilda to the highest form, so Miss Honey keeps her in her class, giving her advanced books to study while the rest of the class learns basic lessons. She does her best to nurture Matilda's mind and allow her to learn new things. Meanwhile, Matilda quickly befriends the other students in school and learns about the ways they resist Miss Trunchbull's terror. The peak of Miss Trunchbull's horrible antics is reached when she calls a school-wide assembly, and makes a boy named Bruce Bogtrotter eat an entire giant chocolate cake on his own in front of everyone as punishment for stealing a slice of hers. To her surprise he does it without getting sick or quitting, a small victory for the students against her.
Miss Trunchbull comes into Miss Honey's class for one period each Thursday to take over, and she terrorizes the students with difficult math and spelling questions and punishes them with physical abuse when they cannot answer. Matilda's friend Lavender, seeking to get revenge on Miss Trunchbull, sticks a large newt in her drinking glass, sending Miss Trunchbull into a frenzy. Miss Trunchbull blames Matilda for placing the newt there, even though she did not do it, and Matilda gets so angry that a peculiar sensation of power comes over her and she manages to knock the water glass over with her mind, pouring the newt onto Miss Trunchbull's bosom.
Matilda is awed and frightened by her newfound power, and when she demonstrates it for Miss Honey, the teacher invites her back to her cottage to talk. Matilda is mystified when she sees Miss Honey's cottage, a tiny, sparse place hardly fit for living. Miss Honey reveals her life story to Matilda: her parents died when she was young, leaving her in the care of her cruel aunt, who has bullied her and forced her to work ever since. This terrible aunt takes nearly every cent of Miss Honey's salary, so she cannot afford to live anywhere but this tiny shack. At last, Miss Honey reveals who this aunt actually is: Miss Trunchbull.
Matilda comes up with a plan to get back at Miss Trunchbull and help Miss Honey. She hones her power until she can make objects move in the air at her will, and then the following week when Miss Trunchbull comes in to teach their class, she has the chalk move on its own and write an ominous message to Miss Trunchbull. Miss Trunchbull believes that the message has come from Magnus, Miss Honey's deceased father. Panicked, she disappears, moving out of his house and leaving Crunchem Hall.
When Magnus's will mysteriously appears, it is revealed that his house belonged to Miss Honey all along, as do his life savings. She moves in immediately, and Matilda is a frequent visitor. Under the new head teacher, Matilda is moved up to the highest form, where she finds that because her mind is challenged with hard work, she has lost the ability of telekinesis. She discusses this with Miss Honey but decides she does not mind that it is gone.
When she returns home that day she sees her parents and brother in a frenzy, packing up to move to Spain because her father has finally been caught for being involved with criminals who sell stolen cars. Miss Honey offers to adopt Matilda so she can stay and live with her, and Matilda's parents, who never truly cared about her, agree to the plan.