Sara Crewe was born and grew up in India. Her French mother died when she was born, and so she grows up knowing only her father. She has many toys and pets, and also an ayah. She realizes she has all of those things because her father is rich.

But the climate in India is not good for children so they go to England and Sara is left as a parlor border at Miss Minchin's seminary for girls. The house seems respectable but everything about it is ugly and hard. Sara tries to settle in and make friends with the other students until she learns that she will never see her beloved father again.

Sarah's life turns upside down as she transforms from princess to pauper. She used to take dance lessons and is known as Princess Sara because she is miss Minchin's star student, but now she does errands for the seminary and lives in an attic.

Despite not being able to study like she used to, requiring her to work without pay in exchange for food and a place to live, Sara's strength of spirit prevails, and she becomes an inspiration to everyone she encounters.