Sara Crewe is a young and imaginative girl who has been brought to Miss Minchin's boarding school in London by her doting father, Captain Crewe. Sara's father is wealthy and indulges her with every comfort and luxury, earning her the nickname "The Little Princess" at the school. Sara is known for her kindness and generosity toward others, and she quickly befriends the other girls at the school.

However, Sara's life takes a tragic turn when her father's fortune is lost in a business venture, and he dies. Sara is left destitute and is forced to work as a servant at the school she once attended as a wealthy student. She faces mistreatment and cruelty from Miss Minchin and the other girls who were once her friends.

Despite her harsh circumstances, Sara remains resilient and maintains her dignity. She finds solace in her vivid imagination and her belief in the power of storytelling. She often tells herself and other girls tales of adventure and magic to escape the grim reality of her situation.

Sara's life takes another unexpected turn when she befriends her neighbor, Mr. Carrisford, who recognizes her from her father's stories about her. Together with Mr. Carrisford's servant, Ram Dass, they help Sara in a heartwarming and surprising way.