Nearly nineteen-year-old Nicholas Nickleby suffers a change in fortunes when his father dies, leaving him, his sister Kate and his mother in financial need. They approach their distant uncle, the businessman Ralph Nickleby, for aid. After much consideration, and not before making enquiries through the family’s acquaintance Miss La Creevy, Ralph begrudgingly agrees to help them. He suggests that Nicholas should take a job as assistant schoolmaster at Dotheboys Hall, a school in Yorkshire run by one-eyed Mr Squeers.

Nicholas agrees on the condition that his mother and sister are cared for. The next day Ralph arranges a meeting with Squeers, who has come to London to collect pupils, and successfully persuades the schoolmaster to take Nicholas on. After departing from his uncle, Nicholas meets Newman Noggs, Ralph’s curious assistant. When Nicholas happily explains about his new position and change in fortune, Noggs reacts peculiarly but offers no explanation.

Nicholas prepares to leave for Yorkshire and asks little Miss La Creevy to care for his mother and sister. With some misgivings, Nicholas goes to meet Squeers and begins to question his treatment of the schoolboys. As they begin to depart, Ralph, accompanied by Kate and Mrs Nickleby, come to say goodbye. As Nicholas bids them farewell, Newman Noggs appears and quietly passes him a mysterious letter. And so, Nicholas, Squeers and the boys begin their coach journey to the north accompanied by a range of other passengers.

Following an unexpected accident, the passengers move to the nearby public house and entertain one another with stories. Later, Nicholas sees Dotheboys Hall for the first time and is introduced to the hard-nosed Mrs Squeers. He despairs at his new position but is determined to continue for the welfare of his mother and sister. He remembers the mysterious letter and reads it.

Nicholas begins his job as assistant schoolmaster at Dotheboys Hall and sees the poor conditions of the pupils and their education. He tries to remain hopeful but becomes increasingly aware that his uncle Ralph has deceived him and begins to worry about his family. Nicholas befriends a bedraggled, disabled boy called Smike who was left with Squeers as a child. Meanwhile, Mrs Squeers and her daughter Fanny discuss Nicholas, and Fanny after meeting him, begins to grow affectionate towards him.

Nicholas joins Fanny, her friend Tilda and John, Tilda’s fiancé, for a game of cards and unwittingly offends everyone around the table. Back in London, Ralph finds Kate a position at the dress shop of the extravagant Mr and Madame Mantalini and agrees to provide Kate and Mrs Nickleby with new lodgings.