It is the Victorian Era in London, England, and little Sara Crewe (Shirley Temple) is forced to enter a boarding school while her affluent, widowed father (Ian Hunter) heads off to fight in the Boer War. Sara is charming and unpretentious despite her father's wealth and high society status. At first the staff behaves as if she is royalty, but when her father is reported as having been slain in the war, the tide swiftly turns, and she becomes the personal servant of the headmistress (Mary Nash). Sara is forced to dress in rags and sleep in a poorly insulated attic. There she endures the weather, the drudgery of tedious tasks, the headmistress's harsh treatment and her even harsher words. Although her world has been turned upside down and she finds herselfliving a strange and brutal existence, her willful spirit and unfailing optimism that her father will return, overshadow her unhappy existence and prove that she is indeed a little princess.