Matilda Wormwood (Mara Wilson) is an extremely gifted young girl, however her gifts go unappreciated by her uncaring, unpleasant family. After her father, crooked car dealer Harry Wormwood (Danny DeVito), refuses to buy her a book, she takes matters into her own hands and begins to visit the library. After two years, she has read every book in the library, becoming extremely knowledgeable about a variety of subjects for a girl her age.
Eventually, after constant pleas by Matilda, her parents agree to send her to school. Matilda is enrolled at Crunchem Hall Elementary School, where children are routinely terrorized by the oppressive and cruel principal, Agatha Trunchbull (Pam Ferris). However, Matilda's teacher, Miss Miss Jennifer Honey (Embeth Davidtz), is, by contrast, kind and caring, and she quickly recognizes Matilda's intellectual gifts. Matilda develops a warm friendship with Miss Honey, who is revealed to be Miss Trunchbull's niece. Miss Trunchbull lives in Miss Honey's childhood home, after moving in there when Miss Honey's father died (strongly implied to be murder by Miss Trunchbull herself).
Constantly terrorized and unappreciated by almost everyone in her life, Matilda begins to develop powerful telekinetic abilities as a result of her unused brain ability. She uses these powers to attempt to retrieve Miss Honey's childhood treasures from her house, but accidentally leaves her red hair ribbon behind, giving Miss Trunchbull a clue as to the intruder's identity. The next day, Miss Trunchbull confronts the entire class, but Matilda uses her powers to write a message on the chalkboard, pretending to be Miss Honey's father, demanding that Miss Trunchbull move out of Miss Honey's house or he will "get [Miss Trunchbull] like [she] got [him]". She then humiliates Miss Trunchbull, causing the children, no longer scared of her, to run her out of town. Miss Trunchbull quickly drives away, never heard from again. Miss Honey, made new principal of the school, then moves back to her father's house where Matilda is a frequent guest.
Some time later, Matilda's father becomes wanted by the police due to his illegal dealings, and the family decide to flee to Guam. When Matilda protests, Matilda's parents agree to have Matilda adopted by Miss Honey. Matilda's mother says goodbye to her daughter, explaining "You're the only daughter I've ever had - but I never understood you, not one little bit."
Matilda and Miss Honey live happily ever after, Matilda rarely using her powers again, and both realizing that they have finally gotten what they had always dreamed of: a loving family.
