The film opens with Olive Penderghast (Emma Stone) talking into a web cam about how her little white lie ballooned into an uncontrollable monster. She says she will explain her side, the true side of what occurred. She says that she was a nobody that no one noticed outside her best friend Rhiannon (Aly Michalka). Rhiannon wants to go camping with Olive but Olive lies and says she is going on a date. In reality, she just hangs around the house all weekend singing "Pocketful of Sunshine" by Natasha Bedingfield.The following Monday, pressed by Rhiannon, Olive lies about losing her virginity to a college guy. Marianne (Amanda Bynes), an overly enthusiastic Christian, overhears her telling the lie and soon it spreads like wildfire.The school has a conservative teen church group run by Marianne who decides that Olive will be their next project. The group's harassment disguised as concern comes to head at an English class run by Mr. Griffith (Thomas Haden Church). The class happens to be reading The Scarlet Letter, a novel about adultery and shame. When one of the girls from the church group makes a side comment at Olive, Olive shoots back one of her own. This gets her sent to the principal's office and Olive is given detention. It is there she sees her classmate Brandon (Dan Byrd) walking out of the office with a bloodied nose.Later at home, Olive is with her parents and her adopted brother. Her mother Rosemary (Patricia Clarkson) and father Dill (Stanley Tucci) are very liberal and supportive of their daughter and her choices. Brandon comes over later and propositions Olive; she'll pretend to sleep with him and make him appear straight, when in reality everyone knows he's gay. She agrees and they pretend to have sex at a public party. Afterwards she bumps into an old crush Todd (Penn Badgley), whom she almost kissed years ago but instead lied about it when he said he wasn't ready.Now after apparently sleeping with two guys and the harassment starting to get to her, Olive decides to go with the flow. She begins to wear more provocative clothing and stitches a red 'A' to everything she wears. Boys begin to give her gift cards and money to say they've done sexual things with her to increase their own popularity, which only increases her rep.However, things begin to go downhill quickly. Rhiannon, partly jealous of the attention Olive is getting, joins the church group protesting her. Olive is able to reconcile with Marianne but it is destroyed when Marianne's boyfriend Micah (Cam Gigandet) gets an STD and says Olive gave it to him.Olive sees Mrs. Griffith (Lisa Kudrow) who is crying and confesses that she is the one who slept with Micah. Olive promises to take the blame to save Mrs. Griffith's job and marriage.Olive becomes disillusioned with the fact that though everyone thinks she is sleeping around, no one will take the chance to actually date her. This changes when Anson (Jake Sandvig) comes up to her and asks her out. The date goes sour when Olive sees' Rhiannon at the restaurant and remembers that she has a crush on Anson. Olive tries to recover and Anson attempts to pay her off, so she asks what they'll say happened but Anson thinks he will actually get sex and tries to force himself on her. She resists and he drives off. Todd, who works at the restaurant, sees her and offers to drive her home.Todd tells her that he doesn't believe the rumor mill and thinks she's actually great. He remembers how cool she was about not kissing him years ago and wishes she actually was his first kiss (her friend Rhiannon was and he says she was terrible). Olive is touched but says she can't be with him until she sorts out her life.Olive proceeds to go to the boys that propositioned her and tells them to fess up but most deny it, or in the case of Brandon who comes out to his parents, leave town altogether. When she goes to Mrs. Griffith to make her come clean, she refuses to and uses her authority as an adult to make it clear Olive won't be believed over her. Olive runs to Mr. Griffith and tells the truth but immediately regrets how she did it, realizing she just ruined a marriage.To get everything finally in the open, she does a song and dance number at a pep rally and pretends that she will be doing a sex show via web cam with Todd. In actuality (as the whole movie has been an extended flashback) she confesses what she has done. She also makes up with Rhiannon, apologizing for lying. When she is finishing up, Todd comes by riding a lawnmower and tells her to come out. She closes her web cam confession saying she really likes Todd and maybe she will lose her virginity to him in the future but at the end of the day it is no one's business but her own. She leaves the house to kiss him and they ride off from the neighborhood on the lawnmower (a joke Olive made earlier on in the piece where she says "Whatever happened to chivalry? Does it only exist in 80's movies? I want John Cusack holding a boombox outside my window. I wanna ride off on a lawnmower with Patrick Dempsey").