NOTE: This spoiler was sent in by June who says... "If you have only see Bob Hoskins as scruffy characters you will be surprised at his performance here. Mr. Van Damm is very proper and dignified. Judi Dench is magnificent as always."

The film opens at the funeral for Mrs. Henderson’s (Judi Dench) husband. On the way back to her home for the funeral lunch she allows herself a moment to row out onto the lake and break down in grief, but back at the house she is polite to all the mourners, then confesses to her best friend that she is bored with widowhood. At lunch the next day her friend goes over the benefits of widowhood: Widows can have hobbies, serve on committees, and can buy things without any one arguing with you. Her attempts at hobbies and committee work fail, but one day when she is being driven through London she finds something to buy: A run-down theater. She goes to France and visits her son's grave in what is clearly a military cemetery. She spends a long time ‘discussing’ things with him. She decides to buy the theater and asks her lawyer to find a manager.  Her lawyer finds Mr. Vivian Van Damm (Bob Hoskins) to manage the theater and after some playful sparing they agree that he will be in control of the production. His innovation is that instead of only running two shows per day they will run continuous shows. The auditions begin with the assistance of Bertie (Will Young), a rising star that Van Damm has snagged away from the bigger theaters. Mrs. Henderson notes that Mr. Van Damm is quite happy getting close views of the auditioning chorus girls, but Bertie admits that his interests lay ‘elsewhere’ which Mrs. Henderson finds delightful. Mrs. Henderson and Mr. Van Damm continue to bicker over every aspect of the show, including the name of the chorus and how high to hang the Windmill sign.The show opens to fabulous reviews and is a big hit, but then all the major theaters begin continuous performances. Soon the Windmill is losing money and in danger of closing. Mrs. Henderson gets the idea to have nude girls. She gets the blessing of the Lord Chancellor (or Tommy as she calls him) by agreeing that the girls will remain still, like statues in a museum. Van Damm and Bertie go out into the country to look for fresh faces and nearly run down Maureen (Kelly Reilly) on her bicycle. Soon Maureen and the other girls are rehearsing for their opening. After a severe case of the jitters, the girls argue that if they are going to be nude so should everyone else. Bertie leads the stagehands in removing their own clothes and they all tease Mr. Van Damm to join in. Mrs. Henderson comes down to check how things are going and walks in on a theater full of naked people, including Van Damm.

The show opens to a somewhat stunned audience, but Lord Chancellor leads the applause and everyone soon joins in. During the after party Mr. Van Damm introduces Mrs. Henderson to his wife. It is clear that Mrs. Henderson is taken aback and perhaps had romantic feelings toward Van Damm. She is very rude to his wife and after she and Van Damm have a serious argument he bans her from the theater. The nude review is a big hit and Mrs. Henderson cannot stand not being at the theater. She sneaks back several times using some very bad disguises. Van Damm catches her and she makes up to him by giving him credit on the theater marquee. She goes back to France to visit her son’s grave one last time.

The world is changing and the Nazis are moving into Holland and France. Since the Windmill Theater is actually underground it is the safest place around and most of the performers move in.

Young soldiers now make up much of the audience and the shows continue even through The Blitz. The young men wait for the girls after the show and all the girls except Maureen are happy to go out for a bit of fun. Maureen confesses to Mrs. Henderson that she was always falling in love and has decided to keep away from the young men. One night Mrs. Henderson sees a young man waiting at the stage door. She discovers he is hoping to see Maureen and Mrs. Henderson manages to get the two of them together for the few days he has left before he ships out.

Maureen soon gives her notice that she is quitting. She is pregnant and the young man has written that he intends to go back to his girlfriend after the war. She blames herself only and tells Mrs. Henderson and Mr. Van Damm that she is going out for some air. As Mrs. Henderson and Van Damm bicker over who is really at fault Bertie comes by and announces that an air raid warning has been sounded. They frantically run after Maureen, but are blown back by a terrible explosion. Later Maureen’s lifeless body is pulled from the rubble and Van Damm turns on Mrs. Henderson and accuses her of being foolish and totally out of touch with how real people live.

The show goes on without Maureen, but soon the Lord Chancellor’s office tries to shut down the theater as a public danger. Van Damm alerts the media and there is a crowd in front of the theater just in time for the Lord Chancellor’s arrival. Mrs. Henderson arrives and addresses the crowd. Her son died in the First World War at the age of 21. When she was going through his things she found a ‘French’ postcard. It made her sad to think her son most likely died without ever seeing a real nude woman. She is presenting the review at the Windmill as a kind of gift to all the young men and to give them joy. As the air raid sirens begin to sound Van Damm asks the Lord Chancellor if they shouldn’t get the people off the street. The theater is allowed to reopen and the show goes on. As the audience joins in singing with the performers Van Damm finds Mrs. Henderson up on the roof. They dance together and the closing titles state that when Mrs. Henderson died in 1944 she left the theater to Mr. Van Damm.