Nanny McPhee (Emma Thompson), a person of unsettling appearance and magical powers, enters the household of the recently widowed Mr. Brown (Colin Firth) and attempts to tame his seven exceedingly ill-behaved children. The children, led by the oldest boy Simon (Thomas Sangster), have managed to drive away 17 previous nannies and are certain that they will have no trouble with this one. But as Nanny McPhee takes control, they begin to notice that their vile behavior now leads swiftly and magically to rather startling consequences.

Her influence also extends to the family's deeper problems, including Mr. Brown's sudden and seemingly inexplicable attempts to find a new wife; an announcement by the domineering Aunt Adelaide (Angela Lansbury) that she intends to take one of the children away; and the sad and secret longings of their scullery maid, Evangeline (Kelly Macdonald). As the children's behavior begins to change, Nanny McPhee's arresting face and frame appear to change as well, creating even more questions about this mysterious stranger whom the children and their father have come to love.