It is December 1933. America is in the midst of the Great Depression. Annie is an 11 year old orphan in New York who was left on an orphanage step as a baby with an unsigned note saying, "Please take care of our little darling. Her name is Annie..." Half a silver locket was left around Annie's neck. Her parents kept the other half so that when they came back they would know that Annie was their baby.
Miss Agatha Hannigan, a mean spirited bitter spinster, is in charge of the orphanage. Annie and her orphan friends spend their days scrubbing, cleaning and washing. One day Annie escapes from the orphanage and goes in search of her parents. Although she does not find her parents, she does meet up with a sad-faced scruffy stray mutt (dog) she calls Sandy.
Annie is arrested and returned to the orphanage where she meets Miss Grace Farrell, secretary to Oliver Warbucks, the billionaire industrialist. Warbucks has decided to invite an orphan to spend the Christmas holidays at his home. Much to the fury of Miss Hannigan, Annie is chosen by Miss Farrell and driven off in a limousine to spend Christmas with Oliver Warbucks.
Warbucks arrives home from a business trip and is unhappy to discover that the orphan invited by Grace isn't a boy. Warbucks orders Grace to 'send her back' but Annie gets in on the act and Warbucks finds himself unexpectedly growing to like her. She wins the heart of everyone in the mansion and Daddy Warbucks decides to adopt her.
Not taken by the idea, Annie tells Warbucks of her desperation to find her parents. He offers a certified cheque of $50,000 to anyone who can prove they are Annie's parents. Many dishonest couples turn up to claim their daughter and the money; however, none holds the second half of the locket. When all hopes are gone, Daddy Warbucks organises for the adoption papers to be drawn up.
As the papers are being signed, the Mudges, thanks to Miss Hannigan's connivance, arrive with half a locket that appears to fit Annie's half, proving they are Annie's real parents. Warbucks, being suspicious of the Mudges, turns to President Roosevelt for the help of the FBI.
On Christmas morning the FBI provides the unhappy news that Annie's parents died some years ago. Miss Hannigan and "The Mudges", (who turn out to be her brother Rooster and his lady friend, Lily) are arrested amid the Christmas party at Warbucks mansion. The party continues and surrounded by all her orphan friends, Annie receives a large Christmas box from Daddy Warbucks. In it is Sandy. A happy ending - as Annie, Warbucks, Grace and all agree that this Christmas is the beginning of a wonderful new life for all.