August "Auggie" Pullman is a fifth-grade boy living in North River Heights in upper Manhattan. He has a rare medical facial deformity, which he refers to as "mandibulofacial dysostosis". Due to numerous surgeries, Auggie had been home-schooled by his mother Isabel, but as Auggie is approaching middle school age, Isabel and Nate decide to enroll him in Beecher Prep, a private school, for the start of middle school. At first, Auggie is ostracized by nearly all the student body, but he is soon befriended by a boy named Jack Will.

During Halloween, Auggie wears an old "Ghost Face" mask and costume because his dog, Daisy, threw up on his "Boba Fett" costume. Unrecognized, he walks around school knowing he would not get tormented while incognito. As he walks through the door to his homeroom he overhears Jack telling Julian Albans that he was "only pretending to be friends with Auggie". Feeling betrayed, Auggie wants to stay home during trick-or-treating, but his older sister Olivia, nicknamed "Via", talks him out of it. Auggie later confides the incident to another friend, a girl named Summer, but swears her to secrecy. When Jack notices that Auggie has become quiet and distant he asks Summer why, but she only says "Ghost Face" to give him a clue. Jack is shocked when it dawns on him that it was Auggie wearing the Ghost Face costume, and thus had overheard everything he said to Julian. When Julian calls Auggie a "freak," Jack angrily punches him in the face and a fight ensues between the two, which is soon broken up by Mr. Browne and Ms. Petosa. Jack is suspended for two days for his actions, and apologizes to Auggie, and the two reconcile.

During the rest of the school year, Auggie is repeatedly bullied by Julian and his group; they leave hurtful and threatening notes on his desk and tape to his locker their class picture with Auggie photoshopped out. Mr. Tushman, confronts Julian and his parents using all the evidence; Julian's mother proclaims that she had had Auggie edited out of the photo to make it look more presentable to her friends at home. She then says that other students should not be exposed to Auggie. Despite her threats to pull their funding from the school, Tushman suspends Julian for two days. Julian, who stands to lose all his friends, apologizes to Tushman for humiliating Auggie, as his mother drags him out the door.

Meanwhile, Via signs up for Drama Club at her high school after her best friend, Miranda, ignores her; in the process, she meets Justin, with whom she develops a close friendship which later turns into a relationship. Later, Via is selected to be an understudy for the lead role in the school's production of "Our Town", but when Miranda, the lead actress, pretends to fall ill, Via takes her place and gives a performance that earns her a standing ovation.

During a school trip to a nature reserve, when Auggie and Jack are accosted and threatened by a group of seventh graders from another school, several of Julian's friends come to their defense. After their return to school, Auggie is generally more accepted by his classmates, including most of Julian's former friends. At the year's end during the graduation ceremony, Tushman announces that Auggie has been selected for the Henry Ward Beecher Medal for standing out; Auggie receives a standing ovation, and the movie ends with everyone applauding Auggie, and Isabel commenting on him being a "wonder".