The narrative opens with the death of Godfrey Nickleby, leaving his widow and two children, Nicholas and Kate, in financial ruin. Their cold and calculating uncle, Ralph Nickleby, steps in not to offer genuine support, but to place Nicholas as an assistant master at Dotheboys Hall, a wretched Yorkshire boarding school run by the brutal and avaricious Wackford Squeers. Concurrently, Ralph apprentices Kate to a fashionable milliner, Madame Mantalini, subjecting her to a grueling and degrading urban existence. At Dotheboys Hall, Nicholas witnesses firsthand the systematic starvation, neglect, and physical abuse inflicted upon unwanted children.
His breaking point arrives when Squeers brutally beats a half-witted drudge named Smike. Nicholas intervenes, soundly thrashing the schoolmaster, and flees into the freezing night, taking Smike with him. This act of rebellion sets in motion a sprawling sequence of events across England.
Nicholas and Smike find temporary refuge with theatrical troupes and the benevolent Brothers Cheeryble, whose boundless generosity provides Nicholas with honest employment. Meanwhile, Ralph Nickleby continues his financial machinations, entangled with dark figures like Arthur Gride and Snawley, plotting against the happiness and inheritance of his family. The novel develops through a rich tapestry of picaresque adventures, exposing the corrupt underbelly of mercantile London and rural hypocrisy. As storylines converge, long-hidden secrets regarding parentage, forged wills, and past tragedies come to light. Ralph's malicious schemes ultimately collapse inward upon him, leading to his ruin and despair. Through trials of poverty, cruelty, and temptation, Nicholas maintains his honor, protecting his family and securing a future defined by virtue rather than wealth.