Annie is a young, red-haired orphan girl who lives in the Hudson Street orphanage in New York City in 1933. The orphanage is run by Miss Agatha Hannigan, a cruel and bad-tempered alcoholic. Annie’s parents had originally abandoned her at the orphanage, but they had promised to come back for her one day. One night, after Annie sings to the orphans to comfort them, Miss Hannigan punishes the girls by giving them clean-up duties. Later, Annie escapes in a laundry truck and rescues a stray dog. She names the dog Sandy, but they both are soon escorted back to the orphanage.

Grace Farrell, the secretary of the billionaire Oliver Warbucks, arrives at the orphanage. She says that Mr. Warbucks is looking for an orphan who can stay at the Warbucks mansion for a week in order to improve his public image. Grace picks Annie and takes her and Sandy to the mansion, despite Miss Hannigan’s objections. At the mansion, Annie meets the servants and bodyguards of Mr. Warbucks, including Punjab and the Asp. The little girl quickly endears herself to everyone there, including Mr. Warbucks, who had initially been expecting an orphan boy. Annie and Sandy even manage to thwart an assassination attempt at the mansion. After watching a movie at Radio City Music Hall, Grace, who is also the love interest of Warbucks, convinces the billionaire to adopt Annie. He doesn't need much urging, so he visits Miss Hannigan, rebuffs her attempts at seduction, and asks her to sign the adoption papers.

After rejecting a new locket from Mr. Warbucks, Annie reveals that her biological parents had left her with one half of her silver locket, and they had kept the other half so that Annie would know their identity when they eventually returned. On learning this, Warbucks pledges to help Annie find her parents. He makes an announcement on a radio show and offers $50,000 as a reward for Annie’s real parents to come forward. This causes mass hysteria in the city as many fraudsters try to claim the money. To escape the commotion, Warbucks and Annie pay a visit to the White House and meet President Franklin D. Roosevelt. The American president reveals his new social welfare program to help the poor, and he enlists the help of Warbucks and Annie. Annie sings for the President and First Lady, and she returns to the Warbucks mansion. However, Annie is saddened to learn that her real parents have not come forward yet to claim her.

Back at the orphanage, Miss Hannigan is lamenting her situation when she is visited by her con artist brother, Rooster, and his pickpocket girlfriend, Lily St. Regis. It is revealed that Annie's parents perished in a fire, and Miss Hannigan now has the other half of Annie's locket. The trio hatches a plot to claim the reward money, with Rooster and Lily posing as Annie's parents. The orphans overhear this plan and try to escape to warn Annie, but they are locked up. The ruse works, and Annie is kidnapped. However, Annie’s friends finally get word to Warbucks about the fake ruse, and a city-wide search gets underway.

Meanwhile, Annie manages to escape, and she also destroys the reward money check. Rooster chases her up a drawbridge in an attempt to kill her, but Miss Hannigan intervenes and buys Annie some time. Punjab, who has been chasing them in a helicopter, fights off Rooster and saves Annie. Rooster and Lily are arrested, Miss Hannigan is redeemed for saving Annie from the clutches of Rooster, and a grand party is thrown for Annie as she gets officially adopted by Mr. Warbucks. She is given a new locket, and she sings and dances the night away.