In the heart of London, the Darling family children—Wendy, John, and Michael—entertain themselves with stories of Peter Pan, a boy who refuses to grow up. One starry night, Peter himself flies into their nursery, seeking his rebellious shadow that Wendy had found earlier. Accompanied by his feisty fairy companion Tinker Bell, Peter is enchanted by Wendy's storytelling and invites her and her brothers to join him in Neverland, a magical place where children can remain young forever. With a sprinkle of pixie dust, Peter gives the children the ability to fly, and they set off on an adventure across the London sky.

Upon arrival in Neverland, the Darling children are introduced to a fantastical world full of mermaids, Native Americans, and pirates led by the notorious Captain Hook. Hook bears a grudge against Peter for cutting off his hand and feeding it to a crocodile. As Peter navigates the Darling siblings through the wonders and dangers of Neverland, they meet Peter's band of Lost Boys and engage in playful escapades. However, tensions rise as Tinker Bell becomes jealous of Wendy's presence, and Hook plots his revenge against Peter, leading to thrilling confrontations and heroic rescues.