Horrid Henry uses his magnetic yoyo to steal cookies from Moody Margaret’s Secret Club. Before he can eat them, his mother tells him to do his homework. The next morning, Henry searches for his homework, only to find that after he left it on the dining room table, the other members of the household variously spilled milk on it, stepped on it, and squashed it into the couch, leaving it a mess.
He leaves it behind and has his friend Brainy Brian forge a note from his mother saying his cat ate it. His teacher, Miss Battle-Axe, realizes that this note is forged and that Henry did not do it himself, since Brian spelled “homework” correctly, something Henry is incapable of doing. With Henry in detention, his friends join him to practice for a talent contest. Miss Oddbod, the headteacher, and a pair of school inspectors walk in on their rehearsal.
Vic Van Wrinkle, headteacher of the exorbitantly expensive Brick House School, has been bribing the school inspectors to put pressure on Ashton Primary, the school Henry attends, in order to justify closing the school. Van Wrinkle stands to make a fortune from the resulting influx of pupils. Horrid Henry and Moody Margaret’s misbehavior prompts Miss Oddbod to fire Miss Battle-Axe and Miss Lovely for failing to enforce discipline, and the school inspectors encourage Henry’s pranks.
With Ashton Primary on the brink of closing, Henry’s Great Aunt Greta volunteers to put up the money to transfer Henry to an all girls school (since she thinks Henry is a girl) and his younger brother Peter to Brick House. Miss Lovely gets a job at Brick House, where she notices the school inspectors. Peter distracts the staff and pupils by performing numerous arrangements of “Frère Jacques” so that Miss Lovely can spy on Van Wrinkle and the inspectors. She is caught by Van Wrinkle, but covertly passes notes about his plan to Peter.
Meanwhile, Henry’s new schoolmates immediately realize he is a boy and begin hunting him. Margaret, who has also been transferred to the school, comes to Henry’s aid, and the two escape. The traumatic experience motivates them to work together to save Ashton Primary. Henry decides to win the talent contest with his Zero Zombies band, hoping that this will make them famous enough that they won’t shut the school down.
After the band wins the contest, Miss Oddbod informs Henry that fame is irrelevant in this case. Henry is later invited game show known as ‘2 Cool 4 School’, with the intention of using the prize money to bribe the school inspectors to leave Ashton Primary alone. In the final round of the competition, he is confronted with Miss Battle-Axe, who challenges him to spell “homework.” Recalling Miss Battle-Axe’s early admonitions and using “Oh Henry, you horrid boy” as a mnemonic device, he correctly spells “homework” with two “o”s for the first time.
Meanwhile, Peter and his friends try to rescue Miss Lovely, but are captured by Van Wrinkle. Miss Lovely tricks him into explaining his plan while Peter has her mobile phone call the school so that Miss Oddbod can hear. Miss Oddbod calls the police and Van Wrinkle attempts to escape, but falls over due to Peter tying his shoelaces together and is later arrested. Henry returns and offers the cash prize to Miss Oddbod, who declines it and explains that the school has already been saved. At Margaret’s suggestion, the money is instead used for a large party.