Protagonist Matilda is a young girl of unusual precocity, but often ill-treated by her father or neglected by her mother. In retaliation, she pulls pranks such as gluing her father's hat to his head, hiding a friend's parrot in the chimney to simulate a burglar or ghost, and secretly bleaching her father's hair.
At school, Matilda befriends her teacher, Miss Jennifer Honey, who is astonished by Matilda's intellectual abilities. She tries to move her into a higher class, but is refused by her headmistress Miss Agatha Trunchbull. Miss Honey also tries to talk to Mr. and Mrs. Wormwood about Matilda's supreme intelligence, but makes no impression. Matilda quickly develops a particularly strong bond with Miss Honey.
When Matilda's friend Lavender plays a practical joke on Miss Trunchbull by placing a newt in her jug of water, Matilda uses an unexpected power of telekinesis to tip the glass of water containing the newt onto Miss Trunchbull.
Miss Honey reveals that she was raised in part by a hostile aunt, identified as Miss Trunchbull, who appears (among other misdeeds) to withhold her niece's inheritance, with the result that Miss Honey lives in poverty in a derelict farm cottage. In preparation to avenge the latter, Matilda develops her telekinetic gift through practice at home. Later, during a lesson that Miss Trunchbull is teaching, Matilda telekinetically raises a piece of chalk against the blackboard and, in the resulting writings, poses as the spirit of Miss Honey's late father, demanding that Miss Trunchbull concede Miss Honey's house and wages and leave the region forever.
This is soon accomplished, and with the approval of the school's capable and good-natured new Headteacher, Mr. Trilby, Matilda herself advances to the highest level of schooling. Rather to her relief, she is no longer capable of telekinesis; this explained by Miss Honey as the result of using her mind in a more challenging curriculum.
Matilda continues to visit Miss Honey at her house regularly, but one day she finds her parents hastily packing to escape from the police who have incriminated her father for selling stolen cars. Matilda asks permission to live with Miss Honey, to which her parents rather uninterestedly agree, and so both she and Miss Honey find their happy ending.