Mia Thermopolis is a student at Grove High School residing with her single mother, Helen, in a refurbished firehouse in San Francisco. Unpopular among her peers, Mia suffers from a fear of public speaking while harboring a crush on Josh Bryant, and is often teased by his popular girlfriend, Lana Thomas. Mia's only friends are social outcast Lilly Moscovitz and her older brother, Michael, who secretly harbors feelings for Mia.
Mia learns from her estranged paternal grandmother, Clarisse, that she is the sole heir to the small European kingdom of Genovia, having inherited the throne from her recently deceased father, Philippe. Clarisse is determined to make Mia into a refined princess so that she may one day rule the kingdom over which Clarisse currently presides. Overwhelmed by the discovery, Mia initially refuses until her mother convinces her to attend her grandmother's "princess lessons" on the condition that she need not make her final decision until the Genovian Independence Day Ball in three weeks' time.
Mia receives a glamorous makeover and a limousine chauffeured by Joe, the queen's head of security and confidant, who becomes a father figure to her. Mia's transformation causes her schoolmates to treat her differently, while her increasingly hectic schedule strains her relationship with Lilly. To appease her best friend, Mia tells Lilly the truth and swears her to secrecy. However, the public soon learns that Mia is a princess after the secret is sold to the press by Paolo, the hairdresser responsible for Mia's makeover, and paparazzi begin to pursue her relentlessly. Although Mia embarrasses herself at her first state dinner, Clarisse admits that she found her clumsiness endearing and suggests that they spend quality time together, canceling their lessons for the following afternoon. While bonding, Clarisse explains that although Mia's parents loved each other, they divorced amicably in order to pursue their own passions, Philippe remaining in Genovia to eventually become king, and Helen returning to America with Mia to offer her a "normal" childhood.
As Mia's popularity grows, Josh invites her to attend a beach party with him. Mia accepts, causing her to neglect Lilly and forgo her plans with Michael. The paparazzi ambush Mia at the beach party. Josh kisses Mia in front of the paparazzi to get his "15 minutes of fame", while Lana helps the paparazzi photograph Mia wearing only a towel; both photographs are printed in the newspaper the following day. Finding the photos inappropriate for a princess, Clarisse admonishes Mia for her behavior, after which a humiliated Mia promises to renounce her title. Joe reminds Clarisse that Mia is still both a teenager and her granddaughter, suggesting that the queen reacted too harshly.
After making amends with Lilly, Mia gets back at Josh during PE and finally stands up to Lana for bullying a schoolmate. Mia invites both Lilly and Michael to the ball but Michael declines, still heartbroken over Mia's initial dismissal. After Clarisse apologizes to Mia for scolding her, she states that Mia must publicly renounce the throne at the ball. Terrified by the prospect, Mia plans to run away until she discovers a touching letter from her late father and relents. Mia's car malfunctions while driving to the ball, stranding her in a downpour until she is retrieved by Joe.
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