We begin the story with Aunt Polly (begrudgingly) welcoming her recently orphaned niece into her home. Sending the servant, Nancy, to fetch Pollyanna from the station and then banishing her to the hot and stuffy attic room, Aunt Polly is always contrary to Pollyanna; however, Pollyanna always finds a way to be positive about her situation.
As Pollyanna remains cheerful, she wins everyone over to her positive ways. For example, the teaches Nancy how to play the "Glad Game" to try and find something to be glad about in regards to anything and everything. (Even when Pollyanna was once given crutches instead of a doll, she was "glad" that she had no need of the crutches.) Pollyanna continues to spread her happiness to the poor and the homeless and the injured and the abandoned around the community.
Aunt Polly continues to think of her charge as a burden and a disgrace instead of the joy that she is. In the course of the story we learn Pendleton, who was one of the people helped by Pollyanna, wants to adopt Pollyanna, but Pollyanna wants to stay with Aunt Polly. This serves as a turning point for Aunt Polly's affections.
Pollyanna is eventually hit by a passing car, breaks a leg, and becomes an invalid (possibly never able to walk again). Devastated, Pollyanna abandons the Glad Game. Ironically, at the same time, all of the townspeople admit to Aunt Polly how the Glad Game has helped them.
Aunt Polly's transformation is complete when she ignores her own prejudices by calling Dr. Chilton (her own jilted lover) to Pollyanna's side. Pollyanna is sent to a hospital where she learns to walk again while Aunt Polly and Dr. Chilton rekindle their romance.
The story ends with Pollyanna admitting how much she appreciates being able to walk because she didn't always have that simple ability.