Annemarie Johansen and Ellen Rosen, two ten-year-old best friends living in Nazi-controlled Copenhagen, Denmark, during World War II, and Annemarie's younger sister Kirsti, are stopped on the street on their way home from school by German soldiers. Annemarie tells her parents about the incident when she returns home. She is told to be more careful, especially because Ellen is Jewish. The Germans soon announce that they will be "relocating" Denmark's Jewish population. At the local synagogue, the Nazis take the names and addresses of every Jewish family in Copenhagen. Ellen's parents flee Denmark with Annemarie's brother-in-law, Peter. Ellen is forced to stay with the Johansens and masquerade as Lise, Annemarie's late older sister, despite being half her age. One early morning, three soldiers enter the Johansens' apartment, believing the Rosens might be hiding there. To conceal Ellen's identity, Annemarie rips off her Star of David necklace. Ellen is passed off as Annemarie's sister, with her parents providing old photos of Lise to prove this. The soldiers are suspicious of their story, but leave anyways.
Annemarie, Ellen, and Kirsti leave with Annemarie's mother the next morning for Uncle Henrik's house, which is across the lake from Sweden, a neutral country where Jews aren't persecuted. When they arrive, Henrik tells Annemarie that her Great-Aunt Birte has died, and a huge casket is placed in the middle of the living room. Annemarie doesn't believe she has a Great-Aunt Birte, but Henrik encourages her to be brave and keep this secret to herself, even from Ellen. The next evening, many people come to mourn "Aunt Birte", to Annemarie's puzzlement. Nazis come to the house and see start questioning the family. They explain that Great-Aunt Birte has died, and they are carrying out traditional rituals. When the Nazis order the casket to be opened, Mrs. Johansen lies that Great-Aunt Birte had typhus, a contagious disease, and the Nazis leave without further questions. After they leave, the wake continues. Peter, who is present, reads to the group the beginning of Psalm 147 from the Bible, which describes the Lord God numbering the stars. Annemarie's mind begins to wander since she is unfamiliar with the psalm. After finishing, Peter opens the casket and gives the warm clothing and blankets stored inside it to the Jewish families. They leave in smaller groups to avoid drawing attention to themselves. Ellen says goodbye to Annemarie and her mother.
Early in the morning, Annemarie sees her mother crawling in the distance because she had broken her ankle. After helping her mother back to the house, Annemarie finds a packet of great importance to the Resistance, which Henrik had dropped when he accidentally tripped on a flight of stairs. Mrs. Johansen tells Annemarie to fill a basket with food and the packet, and run as fast as she can. Annemarie runs off onto a wooded path in the direction of her uncle's boat. She is halted by Nazi soldiers with dogs. When they question Annemarie about what she is doing out so early, she lies that she is bringing a meal to her uncle. The soldiers do not believe her and one of them searches through the basket. However, they eventually let her go, and Annemarie makes it to her uncle's boat. She gives Henrik an envelope that contains a handkerchief, and returns home.
Henrik returns to Denmark later that evening from Sweden. He reveals to Annemarie that many Jewish people, including the Rosens, were hiding in his boat to be smuggled into Sweden. He also explains that the handkerchief in her package contained the scent of rabbit blood, which attracted the Nazi dogs, and the strong odor of cocaine, which numbed their noses and prevented them from tracking the Jews. Several revelations are made, including that Peter is in the Danish Resistance. It also reveals that Lise had not died from a car crash but from being run over by a tank because she was part of the Resistance.
Denmark is liberated two years after the war's end. Since then, Peter has been executed by the Nazis and is buried in an unmarked grave. Annemarie finds Ellen's Star of David necklace and decides to wear it until Ellen comes back to Denmark.
