In 1974, young Thaddeus Sivana is riding in a car with his father and brother when he is suddenly transported to the Rock of Eternity, a magical temple in another dimension. There, the ancient wizard Shazam has spent centuries searching for someone pure of heart on whom to bestow his power and name as champion, after the previous champion released the Seven Deadly Sins, which killed the rest of the Council of Wizards. Thaddeus is tempted by the Eye of Sin, through which he hears the voices of the Sins, trapped in stone statues, promising him power if he will free them. The wizard deems Thaddeus unworthy and magically returns him to the car, where he makes a scene that leads to a car accident, crippling his father. The Sins send Thaddeus a message telling him to find them.

In present-day Philadelphia, 14-year-old foster child Billy Batson continually runs away from foster homes to search for his birth mother, from whom he became separated while at a carnival ten years prior. He is placed in a group home run by Victor and Rosa Vasquez, with five other foster children: Mary Bromfield, Pedro Peña, Eugene Choi, Darla Dudley, and superhero enthusiast Freddy Freeman. Meanwhile, the embittered Sivana succeeds in his lifelong quest to find a way back to the Rock of Eternity. He steals the Eye of Sin, becoming the Sins' vessel, bests the wizard, and uses his newfound power to kill his father, brother, and Sivana Industries' board of directors.

At school, Billy defends Freddy from bullies and is chased into a subway, where he is transported to the Rock of Eternity. The wizard chooses Billy to be his new champion: by saying the name "Shazam", Billy is transformed into an adult superhero. The wizard turns to dust, leaving his magical staff behind. At home, Freddy is taken into Billy's confidence and helps him explore his newfound powers, which include super strength, speed, near-invulnerability, and electricity manipulation. By saying "Shazam" again, he can transform back into his normal body. Freddy posts viral videos of the new superhero, and Billy starts skipping school to use his powers to busk for money and fame, straining his friendship with Freddy. When Billy accidentally endangers and then saves a bus full of people, Sivana confronts him, demanding that he surrender his powers. Billy discovers that he can fly, and manages to escape. His foster siblings deduce that he is the superhero, and complete his search for his mother, who lives nearby. Billy rushes to see her, but is disheartened to learn that she abandoned him, having felt inadequate to raise him as a single, young mother.

Sivana deduces Billy's identity and takes his foster siblings hostage. Billy agrees to transfer his powers to Sivana in exchange for their safety. They go to the Rock of Eternity to use the wizard's staff to effect the transfer, but the children follow and attack Sivana. Billy observes that Sivana becomes vulnerable when all seven Sins leave his body. Sivana pursues them to a winter carnival and unleashes the Sins upon the crowd. Remembering the wizard's words, Billy uses the staff to share his powers with his siblings, transforming them into adult superheroes like him. He then breaks the staff, and his siblings battle the Sins while Billy faces down Sivana. By luring out the final Sin, Envy, Billy makes Sivana vulnerable and yanks the Eye of Sin out of his head, recapturing all the Sins.

Billy and his siblings are hailed as heroes, return the Eye and the Sins to their prison, and realize they can use the Rock of Eternity as their superhero lair. Billy finally accepts his foster parents and siblings as his "real" family. In his superhero form, he has lunch with his siblings at school, revealing to Freddy's surprise that he has also invited Superman. In a mid-credits scene, the imprisoned Sivana is approached by a talking caterpillar,[a] who proposes an alliance.
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