Josie Geller (Drew Barrymore) is a highly intelligent, if pedantic and lonely, copy-editor for the Chicago Sun-Times. Josie desperately wants to be a reporter, and constantly sends story ideas to her boss, Gus (John C. Reilly), who appreciates her eagerness but does not believe she is up to the challenge of being a reporter. Josie is disillusioned with her life and avoids other people, which puzzles her promiscuous co-worker Anita (Molly Shannon). One day during a staff meeting, the tyrannical editor-in-chief, Rigfort (Garry Marshall) assigns her to report undercover at a high school to help parents become more aware of their children's lives. Josie is overjoyed, but Anita and Gus think its a bad idea, and that she will get fired. But she asserts herself and hurries to tell her younger brother, Rob (David Arquette), a former high school baseball champion who works at a postage and packaging store named the Tiki Post and is similarly disillusioned with life.
Rob thinks it is a terrible idea for Josie to go undercover as a student, and reminds her of her own awful high school career, where she was a misfit treated with contempt and cruelty by her peers, and was labelled "Josie Grossie". A nickname which continues to haunt her, along with her misery at being treated so brutally. Josie has never had a romance due to her insecurities. She is unnerved, but is determined to undergo the assignment.
Her first day at South Glen South High School is miserable. Josie reverts back to the old geeky persona that ruined her first high school career. She is late to class and is forced to wear a sombrero as punishment by her eccentric, menopausal teacher. She also has an unfortunate run in with Gibby, Kirsten and Kristen, three mean, popular girls, and Guy Perkins (Jeremy Jordan), the most attractive, popular student at South Glen South. Upon discovering that Guy and his friends have hidden her car, Josie becomes exasperated but is warmed when a kind-hearted, intelligent girl named Aldys (Leelee Sobieski) befriends her. Aldys dislikes Guy Perkins and his gang, referring to them as "lemmings", and they in turn view her as an uncool geek. Aldys sugguests that Josie should join The Denominators, a group of intelligent students. Josie does but fails to get her story.
Josie becomes enamoured with her young English teacher Sam Coulson(Michael Vartan), who is a fan of Shakespeare, as is Josie, and she becomes the top student in his class. After reciting a romantic excerpt from Shakespeare to Sam, Josie has horrible flashbacks to where she read a romantic poem aloud in class to her high school crush, a popular boy named Billy Prince, much to his amusement. Later on in the library, her friend Sheila delivers the news that Billy Prince wants to take Josie to the senior prom, making her dream come true.
One night whilst out driving with Aldys, Josie encounters Guy Perkins and his gang at a local hangout called "The Court" where promiscuity and underage drinking takes place. Guy is nasty to Josie and Aldys, who claims that nothing exciting happens in Guy's court, but Josie knows form experience that Aldys secretly longs to be popular.
Gus loses patience with Josie after a rival paper exposes the truth on The Court, and orders to Josie to become friends with the popular kids. He arranges for her to wear a hidden camera that will report back information to Gus, and soon the whole office become obsessed with Josie's story. Anita, after hearing Josie's recital of Shakespeare, grows unhappy with her promiscuous lifestyle and develops an attraction towards Gus, and he reciprocates.
Josie goes home she confides in Rob about fears. She tearfully tells him that South Glen South is simply a repetition of her old high school days and all she wants is to be accepted and not abused. Rob - who was the most popular guy in school in his youth - insists that if Josie can get one cool person to like her, then no one will dare question her. He urges her to let go of her old self and start anew. Determined, Josie goes to school the next day and overhears Guy telling his group about a cool band that are playing in a bar that night. Josie follows and meets Sam and his uptight girlfriend Lara. However she is tricked into eating a hash brownie and makes a fool of herself onstage by dancing wildly in front of Guy, the girls and Sam.
The next day Josie sleeps in for school. As her hand was stamped "delloser" the night before at the club, the ink prints the word "loser" on her forehead, unknown to her. She merrily goes to school and is horrified to find everyone mocking her. She runs to the bathroom, sees the mark on her face and vomits in the toilet. She breaks down in tears and remembers the night of her prom. She was overjoyed at the thought of Billy Prince taking her to the prom and waits outside for him in her prom gown. But when Billy arrives in his limo, he has another girl with him and the both of them hurl eggs and insults at Josie, who collapses in tears.
As she runs through the school hall, she encounters Rob who has enrolled as a new student and schemes to help her be popular. He becomes an instant hit with Guy Perkins and the other trendy kids, and spreads incredible stories about Josie, convincing the others that she is not a loser. Much to the anger of Aldys, Josie becomes popular and hangs out with the cool crowd.
Sam and Josie grow closer but Sam struggles with his feelings as he thinks that she is a student and therefore off limits. Josie begins dating Guy and she recommends that the theme for the senior prom should be "Meant for Each Other", famous couples from around the world. This idea is met with approval and Guy and Josie attend the prom as Rosalind and Orlando from Shakespeare's As You Like It. Anita, Gus and Josie's various other co-workers watch through the camera and are overjoyed as she is voted prom queen.
As Guy dances with Aldys, as an alleged act of friendship, Josie dances with Sam and watches, horrified, as Gibby, Kirsten and Kristen nearly pour dog food over Aldys as revenge for her insulting them. Josie knocks the can away from Aldys and spills dog food over the three girls, who turn on her and denounce her as a loser. Infuriated, Josie throws her crown away and reveals her true age and occupation, and that she is disgusted by them. She angrily states how shallow the popular girls are, and praises Aldys for her kindness. Josie warns the students that who you were in high school means nothing outside in the real world and urges them to be themselves. She flees and leaves the students appalled. Sam is hurt by her lies and states he wants nothing to do with her.
Josie vows to give Gus a story and write her story of her own high school career. She admits she has never been kissed, and also mentions the students of South Glen South, kindly remarking on Guy's confidance, Gibby, Kirsten and Kristen's beauty, and Aldys's intelligence, and her love for Sam. The entire city is moved by her story and the pain she suffered in her teens. She says she will stand in the middle of the baseball field and wait for Sam to come and kiss her, if he really loves her.
Josie waits but Sam has not heard as he is moving to New York. She waits with encouragement from Anita, Aldys, Gus, Guy and the girls. However just when her five minutes on the clock runs out, Sam appears, apologizes for being late and kisses her.