In 1944 post-civil war Spain, young Ofelia and her pregnant mother Carmen move to a rural area to live with Captain Vidal, Carmen's new husband and Ofelia's stepfather. Vidal, a stern and merciless officer in Franco's fascist regime, is preoccupied with hunting down Republican rebels. He is indifferent to Ofelia, who finds solace in the escapism of fairy tales, and he insists on strict discipline and order within his new family and command. The nearby woods captivate Ofelia's imagination, and it's there that she encounters a mysterious faun who reveals that she may be the reincarnation of a princess from an enchanted realm. The faun entrusts her with three tasks that she must complete in order to prove her royal lineage and return to her mystical homeland.

As Ofelia embarks on the perilous quests set forth by the faun, her mother's health begins to deteriorate, and the reality of living under Vidal's roof becomes increasingly grim. The house staff, including housekeeper Mercedes and doctor Ferreiro, sympathize with the rebels and conduct secret operations to aid them. Ofelia's quests lead her into a world filled with strange creatures and thrilling dangers, blurring the lines between reality and fantasy. This parallel narrative juxtaposes the oppressive world Ofelia seeks to escape from with the perilous labyrinthine tasks she hopes will lead to her true destiny. As Ofelia struggles to complete the quests, the instability at home escalates, and both worlds begin to converge, intertwining her fate with that of her family and the country.