1933 and the depths of the Depression. Annie (11 years old) is living in the Municipal Orphanage on New York's Lower East Side. Miss Hannigan is the principal in charge of the orphanage and needs no lessons on being compared to the wicked witch of the West. Annie decides to escape and try and find her parents. Naturally this proves unsuccessful. However, Grace Farrell, secretary to the millionaire Oliver Warbucks is searching for an orphan that she might invite back to the Warbucks' household to celebrate Christmas.
Despite Warbucks' initial disappointment that Grace has not found a boy, Oliver takes to her and institutes a nationwide search to try and find the little girl's real parents. Miss Hannigan interferes and primes her brother Rooster and his girlfriend, Lily suggesting that they claim Annie as their daughter and thus the reward that goes with the information.
Meanwhile Annie is in Washington cheering up the president, Franklin D Roosevelt. However, Rooster and Lily turn up at the Warbucks' and claim Annie - and the reward. Grace, however, has seen Rooster at Miss Hannigan's office and smells a rat. Subsequently the couple's fraudulent claim is exposed - at the same time it is discovered that Annie's parents had, in fact, died some time ago. Warbucks plans to adopt Annie and her fellow orphans are invited back to the Warbucks' home to share in the festival of Christmas - just as America looks forward to future prosperity in the wake of the depression.