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The Dursleys are preparing for a visit from Uncle Vernon Dursley's boss. When Harry is locked in his room during the visit, he first encounters Dobby the house elf. Dobby warns him not to go back to Hogwarts because there are rumors of dangerous things being plotted. When Harry refuses to not return to Hogwarts, the house elf, in a blackmail attempt, hovers a cake over the head of Uncle Vernon's boss and drops it. Thinking that Harry did it, Vernon puts bars on Harry's windows so he cannot make an escape to Hogwarts. All of Uncle Vernon's efforts fail however, when Ron, Fred, and George Weasley arrive in their flying car to rescue Harry and flee the Dursley home.

The four arrive at The Burrow, the family home of the Weasleys. Mrs Weasley catches the four coming in, and while ensuring Harry that she is not blaming him, yells at her three sons for their carelessness. She tells the boys that they could have been seen by "Muggles" (non-magical people) as they flew through the air. As underage wizards are strictly forbidden to perform magic in the presence of unknowing Muggles, their stunt could have easily resulted in their expulsion from Hogwarts. Harry then meets Ginny, the youngest Weasley child and the only girl, and Ron's father, Arthur Weasley, during a typical Weasley family breakfast. The five student-aged Weasleys — including Percy Weasley — receive letters from Hogwarts from their owls. Booklists in hand, the Weasleys soon leave for Diagon Alley. Harry has never used Floo Powder — the Weasleys' chosen method of transportation — and is unsure of himself. In his nervousness, he accidentally pronounces "Diagon Alley" as "diagonally", landing himself in Knockturn Alley. Fortunately, Hagrid happens upon him, leading him to Diagon Alley and reuniting him with the Weasleys and Hermione Granger.

Harry meets Gilderoy Lockhart, a famous wizard and author, who is signing copies of his new book inside a crowded Diagon Alley bookstore. Lockhart, recognizing the famous Harry Potter, pulls him out of the large crowd and announces his presence to the excited on-lookers. Lockhart announces that Harry will be receiving a copy of his new book about his encounters with dark magic and dangerous creatures. The Daily Prophet, a newspaper in the wizarding community, takes a picture of the two famous wizards for the front page. Mrs. Weasley is extremely excited because she is a big fan of Lockhart. After Harry escapes the sudden spotlight, he and the others purchase their school books and prepare to leave. Harry runs into Draco Malfoy's father Lucius, who could not help but see Harry's scar. There appears to be tension between Lucius and Mr. Weasley due to Lucius's seemingly haughty attitude.

The next scene begins September 1 in King's Cross Station. The entire Weasley family, excluding Ron, cross through the magical barrier to Platform 9 3/4 with ease. Harry and Ron then try, but they cannot go through (Dobby sealed it to keep Harry away from the dangers at Hogwarts); as a result, they miss the Hogwarts Express. Mr. Weasley had brought them all to the station in the flying car, so Harry and Ron steal it and follow the train to Hogwarts. They land in the Whomping Willow, where the car is wrecked and Ron's wand is broken. They are ejected from the car with their luggage and the magical car takes off, leaving them behind. Harry and Ron are caught by the Hogwarts caretaker, Argus Filch, and brought before Professor Severus Snape to be punished. Before Snape can expel the pair, Headmaster Albus Dumbledore and Professor McGonagall arrive. As head of Gryffindor House, only McGonagall has the authority to punish the boys, not Snape. She gives the two detention not just for arriving after the feast and having missed the train, but also for having been seen by "no less than seven Muggles" whilst leaving the station in the flying car. Later Ron receives a howler from his mother, screaming at him for taking the car, but also congratulating Ginny for being sorted into Gryffindor.

During the school year, Harry begins to hear voices, find people Petrified and find writing on the walls in blood. Harry, Hermione and Ron try to figure out about how the Chamber of Secrets was opened and who opened it. They decide to make a Polyjuice potion to disguise themselves as Crabbe and Goyle and talk to Malfoy to find out if he is the Heir to Slytherin. It turns out that he isn't. Soon the whole school finds out Harry can talk to snakes, and thinks that he opened the chamber. Harry finds a book in the girls' bathroom with no writing into it. It belonged to Tom Marvolo Riddle, who came to the school fifty years ago. He is then sent back in time and learns that Hagrid had opened the Chamber fifty years ago.

Things get much worse when Hermione is found petrified and Tom Riddle's diary goes missing. Harry and Ron turn up at Hagrid's hut in the middle of the night and Cornelius Fudge, the Minister for Magic, shows up to take Hagrid to Azkaban, the magical prison. Lucius Malfoy arrives to suspend Dumbledore from the school on behalf of the governors of the school. Before Hagrid is taken away, he gives the two twelve-year-olds a clue to follow the spiders into the Dark Forest. They meet Aragog, a famed giant spider, whom they thought killed a Mudblood (a derogatory term for a witch or wizard with non-magical parents) fifty years ago. Hagrid was innocent, but Aragog turns on them and send his children spiders to attack the two wizards for fresh meat. The flying car magically shows up and they make a fast escape.

Now knowing that Hagrid was innocent, Harry and Ron find out (from a piece of paper in Hermione's hand) that the monster responsible for the petrification attacks is a basilisk. But they also find another message from the heir and the teachers say that a student has been taken into the chamber. It is then revealed that Ginny Weasley is the victim. Gilderoy Lockhart, the Defense Against the Dark Arts professor, was chosen to go down into the chamber to save Ginny, but he tries to make an escape until Harry and Ron catch him. This was because it turns out Lockhart's famous past was false. The three find the chamber entrance in the girls' bathroom and they enter to find a giant snake skin. Lockhart tries to stop Harry and Ron using a memory charm but it backfires because he tries to use Ron's broken wand. Lockhart ends up losing his memory and the spell causes a rock fall, which separates Harry from the others. Harry goes on alone and finds Ginny's body. Tom Riddle shows up telling him that he is beginning to get much stronger. Then Harry learns that Tom is the Heir to Slytherin House and is Lord Voldemort in his teenage form. Riddle sends the basilisk to kill Harry but ends up losing the giant snake because Dumbledore's phoenix Fawkes attacks the Basilisk's eyes. Harry finds the Sword of Gryffindor and uses it to stab the snake in the roof of the mouth, violently killing it. Unfortunately, a fang also pierces Harry's right arm.

Harry, who is dying from the fang's poison, defeats Tom Riddle, by piercing the diary with the fang retrieved from his own arm. Ginny comes round and finds Harry hurt but Fawkes answers Harry's loyalty to Dumbledore and heals Harry's wound with his tears. Then Harry, Ron, Ginny and Lockhart leave the chamber pulled by Fawkes. Dumbledore gives Ron the task to send a letter to Azkaban to release Hagrid, and Harry discovers that Voldemort has transferred his parseltongue (snake language) powers by accident into his scar. In addition, the fact that Harry had used Godric Gryffindor's sword means he must belong in Gryffindor House. Harry soon finds out that Dobby serves the Malfoys and tricks Lucius Malfoy into giving the house elf a sock, thereby freeing him from servitude. Everyone who is petrified is re-animated and before starting the end-of-year feast, Hagrid returns (late as is usual, due to some 'ruddy owl called Errol' getting lost while delivering his release papers), and everyone cheers his arrival. After school ends, Diagon Alley is shown. In the window of the bookshop is Lockhart's new book, "Who Am I?", with the cover image being Lockhart in a straitjacket.