Jim McAllister (Matthew Broderick) is a history high school teacher living in the suburbs of Omaha, Nebraska whose enthusiastic involvement at school masks his frustration with other aspects of his life. Tracy Flick (Reese Witherspoon) is an overachieving senior with a secret vindictive and sexual side. Earlier in the year, Tracy had an affair with another teacher, McAllister's best friend Dave (Mark Harelik). As a result, Dave was fired and divorced by his wife Linda (Delaney Driscoll); Tracy walked away without any reprisal or punishment.
One day, Tracy announces that she is running for student body president, which horrifies McAllister, who is in charge of organizing the school's student government and truly despises Tracy, aware of her ruthless ambition. Set to run unopposed, McAllister decides to teach Tracy a lesson in humility by introducing another candidate. Paul Metzler (Chris Klein) is a polite and popular football player at the school. Paul is unable to play football his final year due to recovering from a broken leg, leaving him depressed. McAllister convinces him to register for the election in order to stop Tracy's chances of winning, since McAllister thinks that if Tracy wins the election, she will have to spend more time with him which might lead to the same misfortune that his best friend had. At first, Paul does not like the idea because he does not feel smart enough to run in the election, and he does not want to go against Tracy, who has been nice to him, even letting him copy her homework. Eventually, Paul agrees with McAllister because the election gives him a new purpose. This only brings out more of Tracy's wicked vindictiveness, as she is jealous of Paul's ease at being successful and popular.
Meanwhile, Paul's lesbian and rebellious younger sister Tammy (Jessica Campbell) is dumped by her girlfriend, Lisa (Frankie Ingrassia), who says that she is heterosexual and was just "experimenting". Lisa does not waste time in "getting over" Tammy, performing oral sex on Paul after asking him to drive her home from school one day. The two become an item (Paul claiming that they would "go to her house after school to fuck" and swim in the hot tub) and election partners, in part to anger Tammy.
In retaliation, Tammy decides to run for president as well, with a platform that student government is a sham. During a school assembly to hear their speeches, after Tracy draws only polite applause and Paul gets a strong reaction, Tammy delivers a defiant speech in which she denounces the election by saying that the school president does not really help the student body, and only uses the position to get credentials for college applications, much to Tracy's chagrin (she knows that Tammy's remark is more then a little true). Tammy also declares that she will dissolve the student government if elected. This rallies the student body to a standing ovation. Fearing the student body will vote for Tammy and thus the dissolution of the student government, Tammy is suspended and is disqualified from the election.
While at school one night over the weekend, Tracy tries to fix one of her posters, but accidentally tears it. In a fit of uncharacteristic rage, she destroys all of Paul's campaign posters. She tries to dispose of them at the power plant, but is observed doing so by Tammy. The next day, when confronted by McAllister, the manipulative Tracy feigns innocence and threatens legal action against the school. A little later, Tracy sees Tammy talking to McAllister and showing him the torn posters, which makes Tracy panic. However, Tammy is actually "confessing" to Tracy's crime and is then transferred to a private parochial school for girls, which was the original objective of her false confession: to get away from the school and be sent away.
Later, McAllister, who is secretly attracted to Linda, kisses her spontaneously the day before the election and they have sex. Linda asks Jim to rent a motel room for a later rendezvous and he leaves school during a class to prepare the room. However, when he arrives later to pick her up, she is not there. He returns home to find Linda and his wife (Molly Hagan) talking together. Knowing he has been caught, Jim leaves without saying a word and spends the night in his car outside Linda's house.
The next morning, McAllister oversees the counting of the election ballots at school. During this, he calls Linda several times, professing his love for her, but she rejects him. After getting stung by a bee, Jim's wife kicks him out of the house when he tries to apologize to her over his infidelity. After all the ballots are counted, Tracy has won by only one vote (Paul voted for Tracy, feeling she was more qualified and that it is too arrogant to vote for oneself).
After seeing Tracy dancing around excitedly in the hall, McAllister deduces that she found out that she won before it was announced. Aware that the thought of winning will go to Tracy's head, McAllister secretly disposes of two of Tracy's ballots and then demands a recount, naming Paul as the winner. While McAllister and Paul argue about the validity of vote, it is suggested that the tally of protest votes for Tammy (disqualified on the ballot) exceeded that of either other candidate. But the very next day, the school janitor (whom holds an irrational grudge against McAllister) discovers the two discarded ballots in a wastebasket that McAllister unwisely left behind and immediately presents them to the principal. Upon arrival for work, McAllister is confronted by everyone that he tried to fix the election. Having been caught yet again, the bad-luck prone McAllister admits to trying to rig the vote to keep Tracy from winning and immediately afterwords resigns from his job.
Divorced and humiliated in having lost everything (job, career, marriage, reputation, friends, etc) in his half-baked schemes to thwart Tracy's evil schemes, McAllister leaves Nebraska forever. Everyone he used to know disavows knowing him and everything bearing his name is removed from the school and the neighborhood. All of his neighbors, friends, students, and co-workers turn their backs on him and to this day talk as if he never existed. McAllister decides to start over with his life when he ultimately chooses to fulfill a longtime dream of moving to New York City. He settles in Manhattan and takes another job of being a tour guide at the American Museum of Natural History. McAllister later meets a new woman and sets about to rebuild his life.
McAllister's friend Dave is revealed to have moved to Iowa after his divorce and took a low-paying job of stocking shelves at a local supermarket. His wife, Lisa, remains in Nebraska with their young daughter and apparently never re-marred or ever saw her ex-husband Dave or Jim McAllister again.
McAllister's wife is said to have sold their house soon after their divorce and also moved away from Nebraska. She legally changed her name and her current whereabouts are unknown.
Having won the election, Tracy fulfills her duties as student body president like a hard-line dictator, keeping all of the students under a tight leach. She later graduates from the school with full honors as valedictorian. She gets accepted into Georgetown University in Washington DC with a full four-year scholarship. Despite having gotten everything she ever wanted (exactly as McAllister predicted by lying, manipulating, seducing, intimidating, pushing and shoving, etc.) she still does not fit in with other students and has no friends... much to her disappointment. Four years later, as Tracy graduates from Georgetown U at the very top of her class with a full degree and the desire to go into politics, she sadly comes to accept the fact that it is indeed lonely being at the top of everything.
Following graduation, Paul gets into the University of Nebraska with his own four-year athletic scholarship and makes new friends by joining a popular fraternity and joining the college football team and he is now playing football again. He graduates from college and is said to now be playing pro-football for the St. Louis Rams.
The misanthropic Tammy loves her new all-girls school, where she has met her new girlfriend. After graduation, Tammy ran away with her girlfriend and their current whereabouts are unknown.
As the film closes, Jim McAllister recounts one final encounter he had with Tracy. During an excursion to Washington DC about seven years after his dismissal from Nebraska, McAllister sees Tracy from a distance climbing into a limousine with a local DC politician. McAllister is reminded of his friend Dave and what evil and sordid things Tracy has done to get where she is today. On the spur of the moment, he angrily hurls a soda cup at the limousine then makes a quick getaway.
The final scene shows Jim McAllister back in New York asking questions to some young school children he is giving a tour to at the Museum, all the while deliberately ignoring an overeager little blond girl... the only one of the group who could answer as she strongly reminds him of a younger Tracy, thus implying that McAllister still does (and forever will) hold a grudge against the ruthless overachiever Tracy Flick.