The film opens with a young, blonde-haired woman outdoors during a rainstorm. She is seen struggling on her knees, and she manages to stumble into a home. The occupants, learning that the pregnant woman is about to go into labour, make preparations for her birth.
With some difficulty, the unnamed woman gives birth to a baby boy (played by Joseph Shiner), with the assistance of a midwife, known as Mrs. Corney (Anne Tirard). The woman, barely able to speak, asks to see her son. When he is given to her, she smiles weakly at him and kisses the baby's forehead before she collapses and dies. Witnessing the woman's birth is Mr. Bumble (Timothy West), a hard-nosed man in charge of the local orphans workhouse. With no information on the mother's identity, he gives the boy the name Oliver Twist.
Like the other boys in the workhouse, Oliver lives a hard life of endless labour and schooling, with only a bowl of gruel for supper, while Bumble and Corney sits above them feasting on food such as leg of lamb. After seeing his half-starved friend Dick devour his bowl and still wanting more, Oliver, in a gesture of compassion, offers the lad his own, then goes up to Bumble and asks for more, unaware of the consequences. His request angers Bumble, who hires him out to work for Mr Sowerberry, a local undertaker.
Sowerberry exploits Oliver's pathetic features by using him as a silent mourner, present at burials for the dead who are without family or friends, many of them children. Oliver's situation is not much different than the workhouse, as he is given a workbench to sleep on and scraps that Sowerberry's dogs refuse to eat for food. Oliver also becomes the object of Noah Claypole's (Philip Davis) hatred.
Claypole, a teenager, has been assigned to supervise Oliver. He gives Oliver harsh tasks and becomes further resentful when Sowerberry decides to use Oliver instead of him for silent mourner duties. Claypole taunts Oliver one day, making fun of his dead mother. The insulting remark angers Oliver, who delivers a surprisingly powerful blow to Claypole's face, breaking his nose.
Sowerberry rushes in and after learning what caused the fracas, takes Claypole's side and tells Oliver he will be returned to the workhouse the following day. Unwilling to return to the workhouse, Oliver waits until later that evening and then sneaks out. He roams the streets that evening until he arrives in the market town of Barnet (near London), where he is met by the Artful Dodger (Martin Tempest). Aware of Oliver's plight as he too is an orphan, the Artful Dodger offers Oliver lodgings from his benefactor. Oliver agrees, unaware of what he has got himself into.
Oliver is now part of a band of thieves, overseen by Fagin (George C. Scott), a kindly Jewish man of dark features. Among Fagin's group are Bill Sikes (Tim Curry), a drunk who oversees the orphan thieves, and Nancy, an attractive young woman often used for sexual favors, and frequently abused by Bill. She takes a liking to Oliver and tries to help him, but for this, she is eventually viciously murdered by Bill.
Oliver is made aware of his true purpose with Fagin when he is expected to work as a pickpocket. Sikes forces Oliver to help him burglarize a home in the countryside. The boy is shot in the process. An elderly man, Mr Brownlow, along with his niece Rose Maylie and housekeeper, Mrs. Bedwin, take pity upon him and nurse the boy back to health. He finds both a newly found happiness and joy with them. Mr. Brownlow and Mrs. Bedwin notice a close resemblance between Oliver and a lady's portrait on the wall, leading them to eventually discovering the boy's true identity.
Throughout all of this is the obsession of one man bent on destroying Oliver and his reputation, even going so far as to try to have him murdered. Monks (Oliver Cotton), who has a distinguishing red birthmark over his right eye, has learned that although he and Oliver are born of different mothers, they are of the same father. Monks learns that their father has disinherited him in favor of Oliver, though he inherited what should have been Oliver's inheritance after his mother's death. Though Monks is legitimate, he also has aspirations of wealth and stature that his inheritance would provide. Thus, he also sees the relationship between them as socially scandalous. His efforts prove unsuccessful in the end, however.
When Nancy's body is discovered, an angry mob descends upon the gang and captures Fagin. "Filthy Jew!" shouts one man who strikes him in the face. Fagin rails against the crowd as he is led away. "If you need money, I am the clever Jew! If you need my help I am the kind Jew! You all sicken me!"
Bill, fleeing after Nancy's murder, tries to kill his pet dog, but the dog escapes and leads the mob straight to Bill, who accidentally hangs himself after trying to flee over a rooftop and hallucinating that he sees Nancy's bloody ghost.
Brownlow is revealed to be a friend of Oliver's father, Philip ("Edwin" in the novel). Monks' real name is revealed to be Edward Leeford, and Philip's marriage to Edward' mother had been an unhappy one. Having separated from her, Philip moved to the country where he met and fell in love with Oliver's mother, revealed to have been named Agnes Fleming. Leeford never told Agnes of his marriage, nor did she tell him when she became pregnant with his child (Oliver). He left for London to ask Edward's mother for a divorce so he could marry Agnes, but died before he could do so. Already having had a premonition that he was going to die, Leeford wrote a will in which he left a small inheritance to Edward and his mother, but the rest to Agnes. Feeling abandoned and ashamed, Agnes ran away and disappeared, leading up to the events at the beginning of the film. Before he went to London, Leeford left both the will and a portrait he had painted of Agnes with Brownlow.
Brownlow does some investigative work on his own to bring justice to his friend's young son. He learns of the cruelty and inhumane conditions at the workhouse, and also learns of Bumble's theft of workhouse funds for his own benefit, money which has been intended to properly feed and clothe the orphans. Bumble immediately blames his wife, Mrs. Mann (to whom he proposed marriage at the start of the film) for the misappropriations and claims to love Oliver as he does the other orphans. After receiving a locket Mrs. Bumble had stolen from Agnes's corpse and revealing to everyone the boy's true identity, Brownlow tells Monks that he will be going to prison. Then, not fooled by Bumble's charade, Brownlow informs him that under British law, a husband is accountable for his wife's misdeeds, prompting Bumble's famous reply "If that's the eye of the law, then the law is a ass." Brownlow then tells Bumble that he will use his influence to see to it that he and his wife lose their workhouse jobs and may even face criminal charges.
The film ends with Monks going to prison and Brownlow and Rose assuring Oliver that he is no longer a foundling, but now has a true identity of his own. Everyone then climbs into Brownlow's coach and they make the journey back to Brownlow's estate.George C. Scott - Fagin
Tim Curry - Bill Sikes
Michael Hordern - Mr. Brownlow
Timothy West - Mr. Bumble
Eileen Atkins - Mrs. Mann
Cherie Lunghi - Nancy
Richard Charles - Oliver Twist
Lysette Anthony - Oliver's Mother
Oliver Cotton - Monks
Eleanor David - Rose Maylie
Philip Locke - Mr. Sowerberry
Ann Beach - Mrs. Sowerberry
Artro Morris - Mr. Giles
John Barrard - Dr. Losborne
Brenda Cowling - Mrs. Bedwin
Anne Tirard - Mrs. Corney
John Savident - Mr. Fang
Debbie Arnold - Charlotte
Timothy Spall - 1st Constable
Robert Russell - 2nd Constable