Magical and moving, this classic tale follows the adventures of Dorothy Gale, a farm girl who lives with her Aunt Em and Uncle Henry, in sepia-tinted Kansas in the early 1900s. She is in big trouble with a cruel neighbor, Miss Almira Gulch, but Aunt Em, Uncle Henry, and farmhands Hunk, Hickory, and Zeke are all too busy to pay attention to her.
Miss Gulch arrives with permission from the sheriff to have Dorothy's dog Toto destroyed for biting her on the leg. He is taken away, but escapes, much to Dorothy's delight. She runs away from home with him to escape Miss Gulch. They meet Professor Marvel, a phony fortune teller, who realizes Dorothy has run away and tricks her via his crystal ball into believing Aunt Em is ill.
As Dorothy returns home worried for her Aunt Em's health, a powerful tornado comes. Unable to get into the storm cellar in time, she runs to her room for safety. Dorothy is hit in the head by a broken window sash and becomes knocked out on her bed. She wakes up to discover the farm house is being carried aloft by the twister. As she looks out a window to watch the storm, she sees Miss Gulch also caught up inside, while simply pedaling her bicycle. To her horror, Miss Gulch transforms before Dorothy's eyes into the cackling Wicked Witch of the West on a broomstick.
The farm house crash lands in the Technicolor world of Oz in Munchkin Land.
Dorothy is greeted by Glinda, the Good Witch of the North, and the Munchkins, who treat her like a heroine, because her house has killed the Wicked Witch of the East. Her sister, the Wicked Witch of the West, arrives. As she is about to claim the magic ruby slippers from her sister's feet, Glinda transfers them to Dorothy's feet instead. The Witch of the West swears revenge on her (and Toto). Glinda tells Dorothy to follow the yellow brick road to the Emerald City, where the Wizard of Oz might be able to help her get back home.
On her way to the Emerald City, Dorothy meets and befriends the Scarecrow who wants a brain, the Tin Woodsman who desires a heart, and the Cowardly Lion who is in need of courage. (All were played by the actors who played the farmhands.) They decide to join her to ask the Wizard for a brain, heart, and courage respectively, though in truth they each have what they want (the Scarecrow shows signs of wisdom, the Tin Man is very sentimental, and the Lion shows signs of bravery). After some danger, they meet the Wizard (in the form of a flaming head) who agrees to grant their wishes, but not until they bring him the Witch of the West's broom.
On their way to the Witch's castle, the Witch's flying monkeys ambush the four and capture Dorothy and Toto. At the castle, the Witch again fails to get the slippers due to magic, and remembers Dorothy has to be killed first. Toto escapes and leads her friends to the castle. After defeating three Winkie Guards and stealing their uniforms, they march inside and free her, but the Witch and her guards eventually trap them. After she sets the Scarecrow on fire, Dorothy accidentally melts her with a bucket of water as she puts out the flames. The guards unexpectedly rejoice now that she is dead, and, upon request, give Dorothy the charred broom in gratitude.
Back at the Emerald City, the Wizard still refuses to grant their wishes, but Toto exposes the "Wizard" as a normal middle-aged man (who resembles Professor Marvel) and he admits to being a humbug. He still grants their wishes by giving the Scarecrow a diploma, the Lion a medal, and the Tin Man a heart-shaped pocket watch, and that convinces them that they have what they wanted all along. He then offers to get Dorothy home in his hot air balloon, but Toto runs away and Dorothy follows, and it leaves without her.
Glinda soon arrives and tells her that she can still return home by clapping her heels together three times and repeating, "There's no place like home." She "returns" home to her family, with the farmhands and Professor Marvel by her bedside.