Cedric Errol lives a quiet and modest life in New York with his widowed mother, cherishing simple friendships with locals like Mr. Hobbs the grocer and Dick the bootblack. Everything changes when an English lawyer arrives with staggering news: Cedric's father was the youngest son of the wealthy and fierce Earl of Dorincourt, making the young boy the sole heir to the vast English estate and title of Lord Fauntleroy. Leaving his home behind, Cedric travels to England to live with his grandfather, a notoriously harsh and lonely old man who despises Americans and expects the boy to be a crude, unmanageable child.
To the Earl's intense surprise, Cedric arrives with an open heart, completely free of fear or artifice, treating his formidable grandfather with absolute trust and affectionate respect. The boy's naive assumption that the Earl is the kindest and most generous man in the world gradually begins to work a subtle magic on the old nobleman. Instead of cowering, Cedric charms everyone he meets, from the castle housekeeper to the tenant farmers, by showing genuine concern for their hardships and using his newly found influence to help the poor.
As the grandfather and grandson grow increasingly close, the Earl finds himself captivated by the boy's nobility of spirit, courage, and unwavering cheerfulness. Meanwhile, Cedric's mother lives nearby at Court Lodge, remaining a constant anchor for her son while the Earl slowly softens his prejudices against her. Their peaceful routine is suddenly threatened when a scheming woman appears, claiming her son is the true Lord Fauntleroy and legitimate heir, plunging the household into turmoil and threatening to strip Cedric of his title.
The fraudulent claim is eventually exposed through the clever intervention of Dick and his American connections, proving the claimant to be an imposter and securing Cedric's rightful place. With the threat removed, the family is fully reunited when the Earl invites Cedric's mother to live at the castle. The story concludes with a magnificent birthday celebration where the transformed Earl proudly watches his beloved grandson accept the adoring cheers of the tenantry.