Matilda Wormwood lives with her parents and older brother in a quaint English town. Unlike her family, whose interests revolve around dodgy car-selling schemes and mindless television, Matilda craves knowledge. By the age of four, she had devoured classics, outsmarting even the librarian, Mrs. Phelps, with her wit and intellect.
Her parents, oblivious to her brilliance, dismiss her as a "bookworm" and "waste of space." They much prefer her brother, Michael Wormwood, who is more like them. Her parents’ dishonest and neglectful ways anger Matilda. As an outlet for her rage, she plays pranks on them, like switching up her father’s hair oil with dye and putting superglue in his hat.
She is sent to Crunchem Hall Primary School when she is five-and-a-half years old. Things get worse here as the principal, Miss Trunchbull, is a tyrannical woman who has a penchant for punishing children. She tosses them out of windows, traps them in a dark cupboard filled with glass pieces and nails, and hangs them by their ears from hooks. Despite the suffocating atmosphere, Matilda finds solace in Miss Honey, her kind and gentle teacher, who recognizes her potential.
While interactions with Miss Honey make her life better, the frustrating circumstances continue to take a toll on Matilda. In one instance, Miss Trunchbull wrongfully accuses Matilda of lying, sparking a quiet rage in her. Overcome by this anger, Matilda unconsciously unleashes her telekinetic powers, tipping over a water pitcher containing a newt on Miss Trunchbull. She later confides in Miss Honey about her peculiar ability. Stunned, Miss Honey invites Matilda over for tea at her house to talk about her powers. Matilda is shocked to discover Miss Honey’s poor financial condition. She learns that Miss Trunchbull, who is revealed to be Miss Honey’s aunt, stole her rightful inheritance when Miss Honey’s father passed away.
Matilda, then, decides to use her powers to help Miss Honey get justice. Posing as the ghost of Miss Honey's father, she commands Miss Trunchbull to give Miss Honey her rightful inheritance. Miss Trunchbull, who is ashamed and terrified, flees town. Miss Honey finally gets ownership of her father’s fortune and house.
Matilda comes home to find her family hurriedly packing to leave for Spain forever. Miss Honey, finally free and prosperous, takes Matilda under her wing, offering her the love and family she always craved.