Matilda JR opens with enthusiastic school children (and their equally enthusiastic parents) singing their own praises…except Matilda. According to her parents, she is nothing but a nuisance ("Miracle"). At Matilda's home, her father, Mr. Wormwood, reveals his scheme to sell old automobiles as brand-new luxury cars to Russian businessmen. Matilda says that she doesn't believe this is fair, and her father insults her, believing her intelligence and love of books to be unnatural. Matilda goes to her room, pausing on the way to mix her father's hair tonic with her mother's hair dye ("Naughty"). The next morning, Mr. Wormwood's hair is green.

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Matilda drops by the library to visit Mrs. Phelps, the librarian. The girl tells Mrs. Phelps the first part of the tale of the Acrobat and the Escapologist, two circus performers deeply in love. The tale cuts off just as the couple is primed to perform their most dangerous trick yet. Matilda starts her first day of school the next morning, surrounded by intimidated new children and scary big kids ("School Song"). Fortunately, Matilda's teacher is Miss Honey, a sweet woman who cares deeply for her students. Miss Honey immediately recognizes Matilda's advanced intelligence, prompting her to visit the school's vicious headmistress, Miss Trunchbull. The teacher hopes to promote Matilda to a more challenging class, but Trunchbull refuses, insisting that Matilda cannot be an exception to the rules ("The Hammer").

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After school, Mr. Wormwood returns home, furious that the Russians did not fall for his scheme. Matilda questions him about it, and he notices her book, prompting him to rip the book apart. In an act of rebellion, the girl lines the rim of her father's hat with superglue, watching in satisfaction as he puts the hat on his head ("Naughty - Superglue - Part 2"). At school the next day, Matilda's classmate NIGEL runs through the playground in a panic, saying he has been blamed for a trick on Trunchbull. He says that if she finds him, she will put him in the infamous chokey, a cupboard lined with nails, spikes and broken glass ("The Chokey Chant"). Matilda tells the students to throw their coats onto Nigel. When Trunchbull storms onstage, Matilda tells her Nigel has been asleep under the coats for the last hour due to his sleeping disorder. Trunchbull reluctantly accepts this explanation and leaves after bullying another student.

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While Mr. Wormwood realizes his hat is glued to his head at Wormwood Motors, Mrs. Wormwood is at the Wormwood house, answering the door when Miss Honey knocks. The teacher tries to explain to Mrs. Wormwood how special her daughter is, but the girl's mother doesn't listen and pushes her out the door. Miss Honey stands outside, wanting to fight for Matilda, yet feeling helpless ("This Little Girl"). Meanwhile, Matilda is at the library continuing her circus love story for Mrs. Phelps. The escapologist announces that their act is cancelled because his wife, the acrobat, is pregnant. However, the acrobat's sister refuses to cancel the act, referring to the contract the performers signed. Matilda promises to continue the next day.

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At school the following day, Miss Honey pulls Matilda aside and promises to bring in extra books to challenge the girl. Matilda is thrilled. But her joy is short-lived as Trunchbull bursts into the classroom, accusing Matilda of eating a piece of her cake. The true culprit, however, is Matilda's hungry classmate Bruce, who accidentally reveals his guilt with a loud, chocolaty burp. Trunchbull comes up with a twisted punishment for Bruce, bringing out the rest of the massive cake for the boy to eat in one sitting. The kids cheer on the boy, who finally finishes off the huge dessert ("Bruce - Part 1"). Despite his victory, Trunchbull takes Bruce to the chokey. Matilda is upset by the unfairness of this. She goes to the library, launching into the next part of her dramatic circus tale. During a performance, the acrobat slips and falls, breaking every bone in her body and passing away-but not before she gives birth to a baby girl. However, the girl grows up with an abusive aunt and a father who is unaware anything is wrong. The story cuts off once again, and the scene shifts to the children in Matilda's school, singing about what life will be like when they grow up. Miss Honey and Matilda join in, wondering what they can do to right all of the wrongs in their lives ("When I Grow Up").

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At the Wormwood home, Mr. Wormwood announces that by tweaking the speedometers in his cars, he has completed a successful business deal with the Russians. While the rest of the family is thrilled by the money, Matilda is disgusted that her father cheated the businessmen. Mr. Wormwood threatens to ban her from the school and never let her read again. Alone in her room, Matilda tells the rest of the circus story to herself. The escapologist discovers that his sister-in-law has been beating his daughter, and he leaves to confront her, but he never returns again.

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The next day at school, Trunchbull believes the students are up to something ("The Smell of Rebellion"). Her fears are confirmed when Matilda's sneaky classmate Lavender puts a newt into Trunchbull's water jug. She immediately begins pointing fingers and figuring out who to blame, but Matilda silences her with a yell. Trunchbull yells back, but suddenly everything slows down and goes quiet as Matilda explains to the audience that she can sometimes find a calmness in herself that allows her to do amazing things ("Quiet"). In this moment, the calmness allows her to throw the glass with the newt at Trunchbull. The headmistress screams and runs away. Miss Honey dismisses the class, but Matilda stays behind to show the teacher her ability. They walk together, and Miss Honey reveals that she is poor and lives in a shed. Her father died when she was little, and her cruel aunt became her legal guardian and the owner or her childhood home. Miss Honey suspects her aunt killed her father, but she has no proof. Matilda asks who Miss Honey's aunt is. Reluctantly, Miss Honey reveals that her aunt is none other than Trunchbull.

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In Miss Honey's classroom the next day, Trunchbull challenges the class to a spelling test. The students spell every word right-proof that Miss Honey's kind, patient teaching methods have paid off. When Trunchbull claims a student has spelled a word wrong and tries to drag her to the chokey, the whole class begins spelling wrong so there will be no room for all of them in the cruel device. As Trunchbull claims she has multiple chokeys for all of them, writing appears on the chalkboard-writing that appears to be from her dead brother-in-law. Trunchbull leaves the classroom screaming. The children sing in joy ("Revolting Children").

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A few days pass, and Miss Honey has inherited her parents' house, taken over the role of headmistress, and removed all the chokeys. Matilda, meanwhile, is about to be whisked off to Spain by her family. Her father is on the run from the Russian businessmen, who have realized that they were cheated by him. However, Miss Honey has a proposition: let Matilda stay with her. After just a bit of reluctance, Mr. and Mrs. Wormwood agree, and Matilda and Miss Honey are both overjoyed ("Bows").