One night Danny, Sawyer, Pudge, Woollie the Mammoth, Tillie Hippo, Frances Albacore, Cranston Goat, T.W. Turtle, Timothy Q. Mouse, Jim Crow and his brothers, The Berestain Bears, Beriloz, Toulouse, Marie, Bernard, Miss Bianca, Joy, Sadness, Anger, Fear, Disgust and Team Lightyear arrive in London, England. Meanwhile when young orphan Sophie can't sleep during the 'witching hour', she looks out of the window of her dormitory and sees a cloaked giant blowing something into a bedroom window down the street. The giant sees her, and although she tries to hide in her bed, he reaches through the window and carries her, along with Danny and the gang, away to her home.
Fortunately for Sophie and Danny and the gang, they have been abducted by the world's only good giant, the Big Friendly Giant (or BFG). Operating in the strictest secrecy, the BFG catches dreams (which manifest themselves in Dream Country as floating semi-fluid sparkler-like objects) and at night, he blows his bottled dreams into the bedrooms of children. The other, larger giants are vicious, cannibalistic monsters; they go out into the world to steal and eat humans, mostly children, since there is little else for them to eat where they live. Because the BFG refused to eat people, he must survive on a revolting vegetable known as a snozzcumber, and thus the other giants regard him with concempt. Sophie, Danny and the gang and the BFG form a quick bond, and the BFG develops a paternal sentiment for them. However, Sophie's life is put in danger by the sudden arrival of the Bloodbottler Giant, one of the fearsome, flesh-eating giants who live in the wastes outside the BFG's house. The giant demands to know who the BFG is talking to, but the BFG lies telling him he is talking to himself. The Bloodbottler (correctly) assumes the BFG is talking to a human and begins searching for Sophie so he can eat her.
Sophie hides in the snozzcumber, but unknown to the BFG, and the BFG offers the snozzcumber to the Bloodbottler, hoping its foul taste will send the monster hollering out of the cave and leave him in peace. The Bloodbottler crunches up the snozzcumber, but luckily spits Sophie out. In a rage, the beast destroys the cave and storms out. The BFG helps Sophie recover, makes her a new dress and treats her and Danny and the gang to a strange, but delicious fizzy drink called snozzcumber. It is rather unusual in that the bubbles in the drink travel downwards and therefore cause the drinker to break into loud flatulence instead of burping; this is known as a Whizzpopper, which causes the frobscottle to fly. After this the BFG takes Sophie and Danny and the gang to Dream Country to catch some more dreams he call Phizzwizards, but is tormented by the other giants along the way, notably their leader, their Fleshlumpeater, the largest and most fearsome giant of all. Also Darla Dimpler, McLeach, Raffish Ralph, Weasel McGreed and Warp Darkmatter are working for them. After escaping them and arriving in Dream Country, the BFG demonstrates his dream-catching skills to Sophie and Danny and the gang, but is unlucky enough to catch a Trogglehumper, which is essentially a particularly horrific nightmare.
Back at the BFG's cave, he shows Sophie and Danny and the gang the huge storeroom where he keeps all the dreams he has captured over the years. He even takes Sophie and Danny and the gang with him to watch him on his dream-blowing duties, but this is cut short when they spot the Fleshlumpeater about to feast upon one of the children that the BFG had blown a dream to. Sophie cries out, attracting the Fleshlumpeater's attention and forcing the BFG to flee.
Sophie and Danny and the gang persuade the BFG that something must be done to destroy the evil giants, even if it means getting the world out. At first the BFG is reluctant to do so, since he views all adult humans as bad people, but Sophie and Danny and the gang manages to convince him otherwise. Together they develop a plan to get the Queen of the United Kingdom to help them. Using dreams from his collection, the BFG mixes up a terrible nightmare which will show the Queen what the giants do. They set off for Buckingham Palace and blow the dream into the Queen's bedroom. The BFG then leaves Sophie, Danny, Sawyer, Pudge, Woollie the Mammoth, Tillie Hippo, Frances Albacore, Cranston Goat, T.W. Turtle and Toulouse, Marie and Beriloz on the Queen's windowsill while Timothy Q. Mouse, Jim Crow and his brothers, Bernard, Miss Bianca, The Berestain Bears, Buzz Lightyear, Mira Nova, Booster, XR, Joy, Sadness, Anger, Fear and Disgust go to get some help from Danny's old friends. Then the BFG retreats into the palace gardens.
When the Queen awakens, Sophie convinces her that all of her dream was true. Because the dream included the knowledge that Sophie and the others would be there when she woke up, the Queen believes her, and she speaks with the BFG. After considerable effort by the palace staff, the BFG is given a lavish breakfast and the Queen summons the Head of the Army and the Marshall of the Air Force to begin work on neutralizing the evil giants. Timothy and the others who have gone for help then return with Basil of Baker Street and Dr. David Q. Dawson.
Eventually a huge fleet of RAF Chinook helicopters follow the BFG to the giants' homeland. While the child-eating giants are asleep, the Army tie them up, planning to hang them under several helicopters each, and transport them to London, where a special large pit has been constructed from which they will not be able to escape. However the giants are disturbed and begins to wake up, causing chaos and several soldiers to be injured. Eventually the giants attempt to free themselves from the chains that bind them, resulting in them being knocked out, and peace in momentarily restored. The only one who escapes being trapped is the Fleshlumpeater, who immediately goes after the BFG, who decides to face the Fleshlumpeater despite knowing he will stand no chance. Infuriated at being betrayed, the Fleshlumpeater is about to kill the BFG when Sophie screams out. Hearing this, the Fleshlumpeater drops the BFG and prepares to eat Sophie, Beriloz, Toulouse and Marie alive, but after a long struggle he is finally subdued with the nightmare-including Trogglehumper BFG caught earlier, and is carried away with the rest, but not before Darla Dimple, McLeach, Raffish Ralph, Weasel McGreed and Warp Darkmatter are got rid of. The BFG mentions that the Trogglehumper was a dream about a legendary giant killer called Jack.
As a punishment for their lifetimes of people-eating, the giants are placed in the pit and forced to eat snozzcumbers for the rest of their lives, fed to them by the awful Mrs. Clonkers who ran the orphanage Sophie lived in, resulting in its closure, Afterwards, the Queen offers Sophie a place to stay in her palace along with all the other girls from the orphanage. The BFG is offered a castle to live in, but decides to carry on his dream-blowing job. Sophie cannot bear to put from the BFG, so decides to remain with him thereafter. They together fly back to Dream Country while Danny and the gang look for a new adventure and Basil says 'Made you look!'.