On the day schoolteacher Agatha Stanton, who is called "Old Lady Ironsides" by her pupils, expects to be selected as the new principal of her school, she and her roommate, fellow teacher Prudence Matthews, must retrieve Geraldine "Jerry" Karns, one of Agatha's favorite students, from jail after she has stolen a pair of roller skates. Agatha and Prudence, with Jerry in tow, arrive at the school, and shortly after, Agatha is crushed to find out that Bruce Arnold, a newcomer, has been given the job. Bruce suggests that Agatha should retire, saying that she is too old and inflexible. The other teachers, including new teacher Ellen Southard, a former student of Agatha, are upset about Bruce's appointment, but Agatha vows to keep teaching as she has always done. Some time later, Jerry is stealing some canned food when her classmate, Elliot "Wet Mouth" Braxton, bumps into her and is mistaken for the thief by store owner Nicky Zackorackus. Elliot is captured, but Jerry confesses and explains that she needed the food for her troubled family. Ellen convinces Bruce to help Jerry by telling him that she was also a troublemaker as a youngster, and was saved from a disreputable life by Agatha's attentions. Agatha convinces Sergeant Abbot, also a former pupil, not to arrest Jerry, while Prudence asks school janitor Guili, a friend of Zackorackus, to dissuade the store owner from pressing charges. Everything is settled satisfactorily, and all seems well until one afternoon, as the children are playing in the street after school, a speeding truck injures Jerry after she bravely pushes another child out of its way. Agatha and Prudence organize the local mothers into blockading the street so that the children can play safely, and despite initial interference from the police, the street is designated as a school play area. Later, on the night before a big exam, Elliot is stealing the answers to the test questions when he overhears Bruce and Ellen, who have fallen in love, teasing each other about her terrible past. Elliot falls as he climbs through a transom while trying to escape, and is found by Agatha and Prudence. He tells them that he saw Bruce and Ellen kissing, and misinterprets their joking to mean that Bruce cannot marry Ellen because of her past. Agatha slaps the boy for slandering the couple, then apologizes. Elliot returns home, where his mother becomes hysterical when she sees his injuries from the fall. He lies to her, telling her that Agatha abused him, so she will not know that he was trying to cheat. Mrs. Braxton presses charges against Agatha, and she is temporarily suspended from duty until her hearing before the school board. Agatha refuses to defend herself, but a few hours before the hearing, her loyal students ask prominent community members, such as banker Philip Pierpont, actress Ethel Harriman and boxing champion Max Handler, to attend the hearing and defend their former teacher. Their pleas on behalf of Agatha convince Elliot to tell the board that he was stealing the papers and lied about Bruce and Ellen in order to cover up. The case is dismissed, and Bruce and Ellen, who are to be married, are the first to congratulate Agatha.