In a small Buckinghamshire village forty minutes by bus away from Reading and 8 miles from Aylesbury, Matilda Wormwood is born to Mr and Mrs Wormwood. She immediately shows amazing precocity, learning to speak at age one and to read at age three and a half, perusing all the children's books in the library by the age of four and three months and moving on to longer classics such as Great Expectations and Jane Eyre. However, her parents emotionally abuse her and completely refuse to acknowledge her abilities; to keep from getting frustrated, Matilda finds herself forced to pull pranks on them, such as gluing her father's hat to his head, sticking a parrot in the chimney to simulate a burglar or ghost, and bleaching her father's hair with peroxide.
At the age of five and a half, Matilda enters school and befriends her polite and compassionate teacher Jennifer Honey, who is astonished by her intellectual abilities. Miss Honey tries to move Matilda into a higher class, but the tyrannical headmistress, Miss Agatha Trunchbull, refuses. Miss Honey also tries to talk to Mr and Mrs Wormwood about their daughter's intelligence, but they ignore her, with the mother contending "brainy-ness" is an undesirable trait in a little girl.
Miss Trunchbull later confronts a girl called Amanda Thripp for wearing pigtails (the headmistress repeatedly displays a dislike of long hair throughout the book) and does a hammer throw with the girl over the playground fence. A boy called Bruce Bogtrotter is later caught by the cook stealing a piece of Miss Trunchbull's cake; the headmistress makes him attempt to eat an 18-inch (46 cm) wide cake in front of the assembly, then smashes the platter over his head in rage after he unexpectedly succeeds.
Matilda quickly develops a particularly strong bond with Miss Honey and watches as Trunchbull terrorises her students with deliberately creative, over-the-top punishments to prevent parents from believing them, such as throwing them in a dark closet dubbed "The Chokey", which is lined with nails and broken glass. When Matilda's friend Lavender plays a practical joke on Trunchbull by placing a newt in her jug of water, Matilda is blamed; in anger, she uses an unexpected power of telekinesis to tip the glass of water containing the newt onto Trunchbull.
Matilda reveals her new powers to Miss Honey, who confides that after her wealthy father, Dr Magnus Honey, suspiciously died, she was raised by an abusive aunt, revealed to be Miss Trunchbull. Trunchbull appears, among other misdeeds, to be withholding her niece's inheritance; Miss Honey has to live in poverty in a derelict farm cottage, and her salary is being paid into Miss Trunchbull's bank account for the first 10 years of her teaching career while she is restricted to £1 per week in pocket money. Preparing to avenge Miss Honey, Matilda practices her telekinesis at home. Later, during a sadistic lesson that Miss Trunchbull is teaching, Matilda telekinetically raises a piece of chalk to the blackboard and begins to use it to write, posing as the spirit of Magnus Honey. Addressing Miss Trunchbull using her first name (Agatha), "Magnus" demands that Miss Trunchbull hand over Miss Honey's house and wages and leave the school, causing Miss Trunchbull to faint.
The next day, the school's deputy headmaster, Mr Trilby, visits Trunchbull's house and finds it empty, except for signs of Trunchbull's hasty exit. She is never seen again, and the next day Miss Honey receives a letter from a local solicitor's office, telling her that her father's lifetime savings were safe in her bank and the property she lived in as a child was left to her. Trilby becomes the new headmaster, proving himself to be capable and good-natured, overwhelmingly improving the school's atmosphere and curriculum, and quickly moving Matilda into the top-form class with the 11-year-olds. Rather to Matilda's relief, she soon is no longer capable of telekinesis. Miss Honey theorises this is because Matilda is using her brainpower on a more challenging curriculum, leaving less of her brain's enormous energy free.
Matilda continues to visit Miss Honey at her house regularly, returning home one day to find her parents and her older brother Michael hastily packing to leave for Spain. Miss Honey explains this is because the police found out Mr Wormwood has been selling stolen cars. Matilda asks permission to live with Miss Honey, to which her parents rather distractedly agree. Matilda and Miss Honey find their happy ending, as the Wormwoods drive away, never to be seen again.
