As newspaper tycoons Pulitzer and William Randolph Hearst become more wealthy, their greed begins to spiral, and in order to out-do Hearst, Pulitzer decides to inflate the newsies' paper prices overnight to avoid having to make other cutbacks. The newsies find out the next morning, and become upset that Pulitzer has to take money from them, even though he is already immensely rich. At this news, Jack and David, who have become good friends through their partnership, organize a strike along with the other outraged newsies, who all fear they will not be able to bear the additional cost.
Jack and Les confront Pulitzer personally, and the rest of the newsies deliver news of the strike to the other boroughs of the city in an effort to persuade them to join their cause. A newspaper reporter named Bryan Denton catches wind of the commotion in the streets and approaches David to inquire about the strike. Meanwhile, Jack and Les are promptly thrown out of Pulitzer's quarters. Denton takes an interest in the boys' story and takes them to lunch, telling them to keep him informed on their progress.
In order to capitalize on their recent victory, they decide to hold a newsie rally at Medda's dance hall. Pulitzer learns of the newsies' intentions and devises to break it up, although he has no legal right to do so. Warden Nigel Snyder steps in and relays to Pulitzer that Jack is an escaped convict from the Refuge, and that this is enough legal cause to stop the rally.
Jack is sentenced to four years of rehabilitation in the Refuge and taken to Pulitzer's private office while the other newsies meet with Denton. Denton regretfully informs the newsies that he was demoted from his position as a strike reporter to his old job as a war correspondent. The newsies are heartbroken and angry, now believing that no one will tell their story after Pulitzer implemented a city-wide printing ban on strike matters. Meanwhile, Pulitzer strikes a deal with Jack, offering to waive his sentence and to pay him a salary if Jack works for him as a "scab," a strike-breaker. Jack, feeling he has no other choice, complies after Pulitzer threatens to arrest David and the other newsies, but he also says he's looking out for himself so he can live his dream.
Outside of Pulitzer's quarters, David and the other newsies wait for Jack's release so they can attempt an escape, but Jack makes them leave, knowing he'll endanger the welfare of the other newsies if he goes with them. The next day, Jack shows up on the streets as a scab, and the newsies are horrified to the point of anger and violence.
After Jack saves the Jacobses from the Delancey Brothers, they find Denton, where they learn that the strike has not proved as effective as they'd hoped, as the city thrives on child labor for its businesses to function - therefore caring little for the protesting of a few hundred newsboys.
At this news, David and Jack realize they must recruit not only the newsies, but also every child worker in the five boroughs. To spread the word, they decide to turn the tables on Pulitzer and print their own newspaper, using Pulitzer's own printing press, which Jack now has access to in Pulitzer's basement. The newsies distribute the "Newsie Banner" to every working child in New York, and as the kids begin to discover the injustices against them, they band together and join the newsies in Greeley Square, leaving the city's child workforce at a standstill. Jack and David confront Pulitzer, who eventually promises to refund all unsold papers.
Most of the film's details are intact, except that Denton and David's sister are composited into Pulitzer's fictional daughter, Katherine Plummer.