Nearly nineteen-year-old Nicholas Nickleby suffers a change in fortunes when his father dies, leaving him, his sister Kate and his mother in financial need. They approach their distant uncle, the businessman Ralph Nickleby, for aid. After much consideration, and not before making enquiries through the family’s acquaintance Miss La Creevy, Ralph begrudgingly agrees to help them. He suggests that Nicholas should take a job as assistant schoolmaster at Dotheboys Hall, a school in Yorkshire run by one-eyed Mr Squeers.

Nicholas agrees on the condition that his mother and sister are cared for. The next day Ralph arranges a meeting with Squeers, who has come to London to collect pupils, and successfully persuades the schoolmaster to take Nicholas on. After departing from his uncle, Nicholas meets Newman Noggs, Ralph’s curious assistant. When Nicholas happily explains about his new position and change in fortune, Noggs reacts peculiarly but offers no explanation.

Nicholas prepares to leave for Yorkshire and asks little Miss La Creevy to care for his mother and sister. With some misgivings, Nicholas goes to meet Squeers and begins to question his treatment of the schoolboys. As they begin to depart, Ralph, accompanied by Kate and Mrs Nickleby, come to say goodbye. As Nicholas bids them farewell, Newman Noggs appears and quietly passes him a mysterious letter. And so, Nicholas, Squeers and the boys begin their coach journey to the north accompanied by a range of other passengers.

Following an unexpected accident, the passengers move to the nearby public house and entertain one another with stories. Later, Nicholas sees Dotheboys Hall for the first time and is introduced to the hard-nosed Mrs Squeers. He despairs at his new position but is determined to continue for the welfare of his mother and sister. He remembers the mysterious letter and reads it.

Nicholas begins his job as assistant schoolmaster at Dotheboys Hall and sees the poor conditions of the pupils and their education. He tries to remain hopeful but becomes increasingly aware that his uncle Ralph has deceived him and begins to worry about his family. Nicholas befriends a bedraggled, disabled boy called Smike who was left with Squeers as a child. Meanwhile, Mrs Squeers and her daughter Fanny discuss Nicholas, and Fanny after meeting him, begins to grow affectionate towards him.

Nicholas joins Fanny, her friend Tilda and John, Tilda’s fiancé, for a game of cards and unwittingly offends everyone around the table. Back in London, Ralph finds Kate a position at the dress shop of the extravagant Mr and Madame Mantalini and agrees to provide Kate and Mrs Nickleby with new lodgings.

Mrs Nickleby has bold ideas about Kate’s future career and they move to their new home which they find in great disrepair. Meanwhile, Fanny and Tilda settle their differences and Nicholas is forced to admit his lack of feelings towards Fanny. Smike and Nicholas become close friends, and Squeers begins to bully Smike more. The next day, the school wakes to find Smike has run away and a manhunt ensues. When Smike is recovered, he is beaten in front of the school. Nicholas cannot stand it and intervenes, causing Nicholas to flee Dotheboys Hall.

Along the road, he meets John Browdie who offers him aid. Nicholas then begins his slow walk to London, accompanied by Smike who followed him. Noggs meanwhile attends a dinner with his neighbours the Kenwigses and their large family, when he is informed that he has two mysterious visitors waiting to see him.

As the Kenwigses and their dinner guests speculate about Noggs and his visitors, Nicholas and Noggs discuss what has happened since he left for Yorkshire. Nicholas discovers that the news of his violent encounter with Squeers has preceded him and becomes desperate to clear his name. Nicholas saves the Kenwigses’ baby from a fire, causing him to be highly regarded by the company.

Nicholas goes to a job agency to find a new position and has an unsuccessful interview with an MP. Later that night, Noggs brings news that the Kenwigses would like to hire Nicholas to teach their children French, which he happily accepts. Meanwhile, Kate begins her new job with the Mantalinis and is introduced to the jealous Miss Knag. She despairs after her first day but is determined to continue.

Miss Knag feigns an interest in Kate and invites her and Mrs Nickleby to dinner. The following weekend, Kate is invited to a dinner party hosted by Ralph for some of his prestigious business partners. She is made to feel exceedingly uncomfortable, especially by the forward Sir Mulberry. Kate reprimands Ralph for subjecting her to such a horrible evening.

Nicholas goes to visit Miss La Creevy and asks about his mother and sister. Ralph finally hears word of Nicholas’s conduct in Yorkshire and disowns him. Smike blames himself for Nicholas’s misfortune and attempts to run away.

Kate returns to work and witnesses the unravelling of the Mantalinis' good reputation. The couple has a heated argument before they are visited by two debt collectors who have come to settle Mr Mantalini’s growing debt. They are forced to hand the business over to Miss Knag who wastes no time in firing Kate. Mrs Nickleby and Kate discuss her job prospects again, and she applies and is then hired to be the companion to a Mrs Wititterly. At the same time, Nicholas and Smike leave London and chance across Mr Crummles, a theatre manager.

After watching a show of theatrics, the boys agree to join his company. They travel to Portsmouth and meet the theatrical troupe, including the “infant phenomenon”. Nicholas begins his new role not only as an actor but as a writer for the Crummles company and finds lodgings for himself and Smike in Portsmouth.

Nicholas gets to grips with his new position and watches the company’s performances. He takes a liking to Miss Snevellicci and agrees to help her find patrons. In doing so, he travels around Portsmouth and meets many different people who are interested in the theatre. He also drafts the new performance and practices his acting part. The day of his stage debut arrives, and he is tremendously well received.

Later, the pretty Miss Petowker joins the company, and Nicholas notices she has an admirer. He discovers that Mrs Kenwigs’s uncle, Mr Lillyvick means to marry Miss Petowker, and the next day they do. Meanwhile, Sir Mulberry and his protégé Lord Frederick Verisopht discuss Kate Nickleby and endeavour to find out when she lives. Mulberry goes to visit Ralph and by chance meets Mrs Nickleby, who is delighted by his interest in Kate.