Nell Trent is a beautiful and virtuous young girl who lives with her grandfather in his shop, magical place full of treasures. Nell's grandfather loves her dearly, and is intensely focused on their precarious financial position and securing Nell a good inheritance by winning at cards. However, Grandfather's good intentions have developed into a harmful addiction. Grandfather has a serious gambling habit. He keeps these nacturnal activities a secret, but borrows heavily from Daniel Quilp, an evil, profiteering loan shark. Grandfather gambles away what little money he has, and Quilp seizes the opportunity to take possession of the shop and make Nell and her Grandfather's lives miserable. Courageously, Nell decides to escape Quilp, and she and her grandfather run away to the country.
Convinced that the old man has stored up a fortune for Nell, her vagabond brother Fred Trent persuades the good natured but easily led Dick Swiveller to help him track Nell down so that Swiveller can marry her and the two can share Nell's supposed inheritance. To this end, Dick unwittingly joins forces with Quilp who, as a creditor, is intent upon obtaining every last penny from Nell's grandfather, and who additionally believes Grandfather to be hiding a fortune. Quilp begins to attempt to trace Nell, but the fugitives are not easily discovered.
Having fallen in with a number of characters, some villainous and some kind, Nell and Grandfather are eventually forced into begging for survival. When things take a turns for the worse and desperation sets in, a kindly gentleman-the Reverend Pratchett-takes pity and leads the two to the safety of his children's orphanage. But all this has come at a considerable cost to Nell's health. Meanwhile, Kit Nubbles-Grandfather's servant boy and Nell's adoring friend-is contacted by a mysterious gentlemam looking for news of the missing duo. The two go after them unsuccessfully, only encountering Quilp, who is also hunting for the runaways.
Quilp forms a grudge against Kit and uses his obsequious lawyer Samson Brass and Samson's sister Sally as pawns in a plot to have Kit framed as a thief. The scheme is discovered by the Brass's unassuming tiny servant girl ("The Marchioness"), who having befriended the capricious Dick Swiveller, decides to tell him what she knows. Dick sets about proving Kit's innocence. The Brasses are quick to frame their controlling client and Quilp is hunted down. While desperately trying to escape his pursuers, Quilp drowns in the icy wharf.
At the same time, new information gives the mysterious gentleman knowledge of Nell's whereabouts. He and Kit journey to find Nell, but her condition has become serious as a result of her arduous journey and the emotional pain of her discovery that Grandfather is still gambling. In a tear-jerking ending Kit is reunited with Nell and the gentleman's true identity is revealed-but is it all too late?