Throughout the story, Miss Trunchbull's treatment of her students is nothing short of child abuse; she seems to believe that intimidation is the best method of teaching. She says her idea of a perfect school would be "one in which there were no children at all." Trunchbull stops short of beating the children with her riding crop, but only because it is now illegal; she often voices regret that she is no longer able to punish the children in this fashion. She often acts sadistically to her pupils, ploughing straight through children so that they "bounce off her feet like farts", making regular visits to classes to show the teachers a few tips on discipline, throwing students out of windows and locking wrongdoers in a torturous contraption known only as "the Chokey." Matilda is once threatened by "the Trunchbull" with this punishment, but she is saved by Miss Honey. Trunchbull also tries to exploit students' weaknesses, like forcing an obese child who stole her cake to eat a large, multi-layered chocolate confection in one sitting. To make matters worse for Matilda, Miss Trunchbull has bought a second hand car that barely works from Matilda's father's car company and takes out her rage at Matilda's father on Matilda, while claiming that he was "right" to warn her about the bad conduct of his daughter.
Meanwhile, Matilda discovers she has psychokinetic powers, a secret which she confides only to Miss Honey. She learns this inadvertently when her best friend, Lavender, puts a newt in Miss Trunchbull's water. When the Trunchbull blames Matilda for it, Matilda becomes so angry at the injustice that she tips the glass over with her mind. Miss Honey is very surprised about Matilda's powers and she takes Matilda to her home.
They arrive at her cottage, where Matilda discovers that Miss Honey lives in poverty. Matilda asks why, and Miss Honey explains how when she was two years old her mother died and her father was a doctor who needed someone to look after everything at home, so he invited his wife's sister to come and live with him but she turned out to be a mean person who treated Miss Honey very badly when not in the father's presence. Miss Honey was 5 years when her father died, and the police decided he'd killed himself. Miss Honey had become her aunt's slave and did everything her aunt told her to: cooking, cleaning, ironing. When Miss Honey was an adult, she wanted to go to university but her aunt wouldn't allow it; however, there was a teachers' training college in the local area and she went under the condition that she would keep up with her work. When she found a job the aunt demanded that she pay all her salary to her except for an allowance of 1 pound a week as payment for feeding and clothing her, and Miss Honey was so terrified of her that she agreed. She found the tiny cottage and rented it from a farmer for 10 pence a week, and when she moved out of her aunt's house she finally got her freedom.
Matilda asks who the aunt is and Miss Honey reveals that it is none other than Miss Trunchbull. With this information, Matilda formulates a plan as to how she can get rid of the Trunchbull for good.
When the Trunchbull investigates Miss Honey's class, Matilda uses her powers to pretend to be the spirit of Miss Honey's father, Magnus, by writing on the blackboard and demanding that Miss Trunchbull give Miss Honey her wages and her father's house. At the sight of seeing this written as though by an invisible hand, Miss Trunchbull faints and is carried from the classroom by the teachers.
The day following the chalkboard incident, Miss Trunchbull disappears, abandoning her brother-in-law's house. Magnus' will is found proving that Miss Honey is the rightful heiress to his property. Miss Honey then moves back into her father's house, and with the Trunchbull gone, Matilda is moved into the top form where she loses all of her powers. Miss Honey believes that Matilda's brain now has to work hard instead of accumulating spare "brainpower" the powers would need: this, the two of them agree, is a good thing, as Matilda would not care to "go through life as a miracle worker".
Meanwhile, the police are alerted to Matilda's father, who has been selling stolen cars. He decides to move the whole family to Spain (Guam in the movie version), but Matilda asks them to let her remain with Miss Honey. They agree, as it is less of a bother, and drive away forever.
Matilda and Miss Honey make a loving family and live together in Miss Honey's father's house.
The film is modernised and Americanised as a retelling: for instance, it takes place in the United States instead of the Home counties of England ("forty minutes' bus trip from Reading" according to Miss Honey), Lavender is African-American (only being described as a "skinny little nymph" in the book), and a boy is thrown out the window for eating M&Ms in a literature class instead of liquorice allsorts during a Bible study class.
Smaller changes are those of ages, TV programmes and the like, and Matilda's brother is turned from a more-or-less ordinary boy to a bullying, fat idiot after his father, while their mother shows some humanity by giving her daughter away because she's better suited for a life with Miss Honey - but "some" only compared to the book, where both parents drop their daughter like a rock. Trunchbull's violence to children is also slightly mitigated. When Miss Trunchbull hurls a pigtailed girl over the fence, the girl lands safely gathering flowers for class, thanks to Matilda's powers. In the book version, she lands flat on her face and is hurt. In another moment, after Bruce Bogtrotter successfully eats an entire cake without throwing up, Miss Trunchbull forces everyone to stay five extra hours after school and copy from the dictionary as punishment for encouraging Bruce (sending them home at night), while in the book, she merely tells them furiously to leave the assembly room.
The most significant divergence is that Matilda's powers are treated more as a conventional superpower and less as a miracle. The film and book both have her start by inadvertent, tiny movements (an exploding cathode ray tube aside), but in the film Matilda eventually goes on to lift and control child-sized objects, and to throw multiple small ones around at will which is unlike the book where it takes much more practice and thought before she can master her powers. The final confrontation with Trunchbull turns into a match of overt physical force versus mental powers, powers she retains to use for trivialities. In contrast, characters in the book never lose their sense of awe and a degree of fear about dealing with forces larger than human. In the book, Matilda's triumph is moving a piece of chalk well enough to write a few dozen words, at the cost of considerable drain to herself, and she loses her abilities afterward while in the film it is suggested that although she doesn't need her powers as much, they will always be with her as she moves a book with her powers. The characters' working theory is that her mental capacity is now being expended in her schooling..