Nicholas has been found employment by his Uncle Ralph at Dotheboys Hall, an academy for boys owned by the drunken and brutal Wackford Squeers.

Nicholas is appalled to find that Squeers is being cruel to the crippled boy Smike and makes plans to escape. Nicholas and Smike set out to London.

Nicholas refuses to restore Smike to Squeers' cruelties, so the duo leave London and find employment with Vincent Crummles and his company of strolling players.

Unknown to Madeline, Ralph and Gride have come upon some important information about her. Meanwhile, Smike falls ill after escaping from Squeers.

Ralph and Squeers conspire one final time to steal Madeline’s inheritance papers as Smike takes a turn for the worse.

Noggs and Cheeryble come to Nicholas’s and Madeline’s aid as Squeers and Ralph finally get their comeuppance and the secret of Smike's parentage is revealed.