Lillian Hellman adapted her own play, The Children's Hour, about a school-girl who ruins the lives of her two teachers with a vicious rumor.
Martha Dobie (Miriam Hopkins) and Karen Wright (Merle Oberon) graduate from college and go to Karen's broken down house, where they find Dr. Joseph Cardin (Joel McCrea). He shares his lunch and helps them fix it up. Mrs. Tilford (Alma Kruger) invites Karen to tea and helps her get her school started. Martha's Aunt Lilly Mortar (Catherine Doucet) arrives. Karen, Martha, and Lilly welcome the girls to their new home. Martha teaches Latin class and catches Mary Tilford (Bonita Granville) using a translation. Joseph makes Karen have fun with him and tells her he is in love with her. Martha tells Joseph of her unhappy childhood with Aunt Lilly as he falls asleep. Joseph wakes and breaks a glass. Martha learns that Joseph is going to marry Karen and cries; Mary sees her. Mrs. Mortar teaches Shakespeare. Mary comes late with flowers, and Karen says they were from the garbage can. Karen asks Mary why she lies and punishes her. Mary pretends she has a pain.
Martha asks Aunt Lilly to leave, and Lilly accuses Martha of loving Joseph; Mary's roommates hear, and Martha separates them. Mary learns from Rosalie (Marcia Mae Jones) what Mrs. Mortar said. Mary forces Rosalie to give her money so she can go home in a taxi and takes Rosalie with her. Mary tells her grandmother Mrs. Tilford about Martha and Joseph and that Mrs. Mortar is being put out. Mary says that Martha hurt Rosalie's arm. Mary blackmails Rosalie with a bracelet Rosalie took and makes her her vassal. Mrs. Tilford makes a call, and all the girls leave the school. Karen and Martha learn the rumor. Joseph embraces Karen, and they go to see Mrs. Tilford. Martha tells Mrs. Tilford that she is playing with their lives, but Mrs. Tilford says she is protecting the children. Joseph asks to see Mary, and Martha catches Mary lying about the keyhole. Mary then says that Rosalie saw them, but Rosalie denies it. Mary makes Rosalie afraid, and Rosalie says she saw it.
In court the judge agrees with the jury and dismisses the slander suit brought by Joseph, Karen, and Martha. Joseph loses his job at the hospital. Aunt Lilly returns, and Martha asks her why she did not testify. Martha tells her to leave. Joseph asks Karen to go to Vienna with him; but she tells him to go alone. Karen cries and tells Martha that she suspects her and Joseph. Martha admits she loves Joseph, though he never loved her. Martha takes the train with Aunt Lilly, who tells her how Mary controlled Rosalie. Martha goes to Rosalie, who confesses. Mrs. Tilford's maid Agatha (Margaret Hamilton) shows the bracelet she found and slaps Mary. Martha says that Mrs. Tilford must live with Mary in fear. Martha kisses Rosalie good-bye. Mrs. Tilford promises to pay the lawsuit and to apologize publicly. Martha sends Mrs. Tilford to Karen with a message to go to Joseph. In the final scene Karen joins Joseph in Vienna.
Current censorship and society's closeting of homosexuality caused the original lesbian plot to be changed into a heterosexual triangle; but the consequences of Mary's spiteful lies are devastating nonetheless.