In 1899, the young Sarah Crewe (Shirley Temple) is placed into an exclusive London boarding school by her widowed father, a wealthy British army officer about to embark for South Africa and fight in the second Boer war. Although she had previously spent all her life in India, Sarah adapts well to her new surroundings. However, things take a turn for the worse when her father is reported dead in battle and his South African financial holdings confiscated by the enemy, leaving her alone and penniless.

In late nineteenth century Brooklyn, Ceddie Errol, the young son of an American woman and a late Englishman finds himself the sole male heir of his paternal grandfather, the Earl of Darincourt. The Earl, who has a pronounced distate for all things American and had previously refused to have anything to do wth Ceddie or his mother, invites them to relocate to England so Ceddie be groomed to take over the family title and fortune.