In 1968 Alabama, a young boy goes to live with his grandmother following the death of his parents. Slowly, the boy gets cheered up with his grandmother buying him a pet mouse whom he names Daisy. One day, they go to a supermarket and the boy goes to buy a box of nails to train Daisy and to build a house for her as well. The boy is approached by a witch trying to lure him with a snake and a chocolate bar, but his grandmother calls him and the witch disappears.
After telling his grandmother about the encounter the boy learns that the witches are in fact real. She says her best friend Alice fell victim to a witch and was cursed into spending the rest of her life as a chicken. The grandmother says that witches never leave once they find a child. Frantically, the boy and the grandmother decide to stay in a nearby hotel. While there, the grandmother tells the boy how to tell a witch from an ordinary woman: real witches have claws instead of fingernails which they hide by wearing gloves, are bald which they hide by wearing wigs that give them rashes, have square feet with no toes which they hide by wearing sensible shoes, have a purple tinge in their pupils and have a powerful sense of smell which they use to sniff out children.
The next day, the grandmother tells the boy to go out to have fun. He takes Daisy and a rope to go get some training done at a grand hall. As he walks there, he meets a gluttonous but friendly boy named Bruno, who gets pulled away by his mother. The boy goes into the grand hall alone. As he’s getting ready to train Daisy, a group of witches led by their all-powerful leader, the Grand High Witch, go into the grand hall; the boy hides under the stage and discovers that the Grand High Witch is planning to give the world’s children a potion that can transform them into mice. The potion will be used in confectionary products in sweet shops and candy stores.
Bruno, having eaten a chocolate bar laced with potion previously given to him by the Grand High Witch, transforms into a mouse. He crawls into the vent and finds the boy and Daisy hiding. The Grand High Witch discovers the boy and forcefully transforms him into a mouse as well. During the commotion, they learn that Daisy was once an orphaned young human girl named Mary turned into a mouse by a witch, and she helps them escape.
They make their way back to the hotel room where the boy and his grandmother are staying. They tell the grandmother of the witches’ plan and discover that the Grand High Witch is staying in the hotel room below them. The boy, Bruno, and Mary devise a plan to get a bottle of the potion so that the grandmother can devise a cure to turn them back into children. The plan is successful, but since the grandmother is unable to create a cure, they instead decide to put a bottle of the potion into a broth of pea soup which will be given to the witches during their dinner.
As the rest of the witches drink the soup, the Grand High Witch encounters the grandmother and recognizes her as the one who got away. While the mice steal the Grand High Witch’s room key, the witches all begin turning into rats, and chaos ensues.
After the grandmother and the mice flee to the Grand High Witch’s room, the grandmother starts to collect all the potions to destroy them. The Grand High Witch finds the grandmother and prepares to kill her but the mice intervene and trick the Grand High Witch into swallowing her own potion, transforming her into a rat. They trap her in an ice bucket and prevent her from escaping. Before they leave the room, the grandmother takes some money from the Grand High Witch’s trunk and releases her cat from its cage. As they close the door, the Grand High Witch’s own cat attacks and kills her.
The grandmother tries to return Bruno and explain the situation to his parents, but the mother and father panic and run away. The Grandmother, The Boy, Mary, and Bruno all go home together with the Grand High Witch’s trunk and become a family. Eventually, the boy and the grandmother decide to help children hunt witches around the world using the very money the witches would have used to destroy the children.