It's 19th century England and the Nickleby family has suffered a great loss in the death of patriarch Nicholas Sr. Accordingly, 19-year-old Nicholas Jr. (CHARLIE HUNNAM) believes it's up to him to care for his sister Kate (ROMOLA GARAI), and mother (STELLA GONET). Yet, he doesn't have the means to do that, so he packs up the family and they head to London where they hope that their uncle Ralph Nickleby (CHRISTOPHER PLUMMER), a successful investor, might be able to help them.
Ralph initially seems willing to do so, but his motives are soon questionable. He gives Kate a job serving as his hostess, but allows and seemingly even encourages his older guests, such as Sir Mulberry Hawk (EDWARD FOX), to come on to her in inappropriate ways. He also sends Nicholas off to the remote Dotheboys Hall where he's to be employed as the assistant to headmaster Wackford Squeers (JIM BROADBENT) and his wife (JULIET STEVENSON).
They're a nasty duo who belittle and beat the boys as well as their lone handicapped servant, Smike (JAMIE BELL). Nicholas, who befriends the poor boy, can only tolerate their behavior for a short while and soon flees with Smike. That, along with Nicholas's rejection of the romantic fantasies of Squeers' daughter, Fanny (HEATHER GOLDENHERSH), soon has the family writing to complain of Nicholas' actions that they, of course, mostly fabricate.
While on the road, Nicholas and Spike eventually run into Vincent Crummles (NATHAN LANE), his wife (BARRY HUMPHRIES), and their band of theatrical performers including Mr. Folair (ALAN CUMMING). It's not long before the two travelers are performing alongside them in Liverpool, but once Nicholas receives word about his sister, they're back to London to defend her honor and take care of Ralph.
To do so, he needs the help of the evil uncle's feisty servant, Newman Noggs (TOM COURTENAY), as well as that of a wealthy businessman, Charles Cheeryble (TIMOTHY SPALL), who, with his brother, has employed the young man. While setting his romantic sights on a young artist, Madeleine Bray (ANNE HATHAWAY), Nicholas sets out to avenge the dishonor that Ralph has brought their family, all while the ruthless uncle attempts to ruin Nicholas' life.