In the cozy nursery of the Darling household in London, three imaginative siblings—Wendy, John, and Michael—yearn for a thrilling adventure with the legendary Peter Pan, the boy who refuses to grow up. Despite their father, George Darling, expressing concerns that Wendy's fantasies may lead her brothers astray, their mother, Mary Darling, supports their imaginative spirit, recognizing that Peter Pan symbolizes the joy of youth. The family's faithful dog, Nana, adds to the nurturing atmosphere.
On what is deemed Wendy's final night of childhood, as her father has declared she will receive her own room the following day, Peter Pan and his mischievous companion Tinkerbell pay her a visit. Unbeknownst to them, Wendy has possessively taken Peter's shadow from the ever-watchful Nana. A lively exchange ensues when Peter finds his shadow trapped in a drawer, leading to a scuffle that inadvertently awakens Wendy. The jealous Tinkerbell is less than pleased about Wendy's presence, particularly when she witnesses Wendy attempting to kiss Peter.
Faced with the reality of growing up, Peter resolves to whisk Wendy away to Neverland, soon joined by her brothers, John and Michael. With Tinkerbell's disapproval evident, Peter uses her pixie dust to grant the children the enchanting ability to fly.
Meanwhile, the villainous Captain Hook, annoyed by Peter's thwarting of his piracy, schemes to locate Peter in the Indian territories. His loyal yet dimwitted deckhand, Mr. Smee, listens intently as Hook recalls his past encounter with Peter, where he lost his hand, which was devoured by the notorious Tick Tock Croc—a fearsome creature that ominously ticks. As Peter and the Darling children soar towards the Indian region of Neverland, Hook takes aim to shoot them down, but Peter cleverly distracts him while instructing Tinkerbell to hurry the children to safety.
Unfortunately, Tinkerbell's quick flight leads to a dire misunderstanding when she calls upon The Lost Boys to shoot at Wendy, mistakenly believing they are following Peter's orders. Just in time, Peter averts disaster, saving Wendy from a misdirected attack, but in the process, Tink faces Peter's wrath and is confined for a week.
In a twist of fate, John takes charge, leading the Lost Boys and his brothers on a quest, only to be captured by the Indians who believe that Peter has abducted their beloved princess, Tiger Lily. They are given until sunset to return her or face a grim fate.
Meanwhile, Peter and Wendy stumble upon a group of mischievous mermaids, who confront Wendy out of jealousy. As tension rises, Peter becomes aware of Hook’s nefarious actions towards Tiger Lily and must intervene. However, as Wendy’s ability to fly diminishes, she requires Peter’s assistance to regain her powers.
Entering Skull Island, Peter creates chaos to lure Hook away, ultimately confronting him in a dramatic showdown. With clever maneuvers, Peter narrowly escapes Hook's clutches, thanks to the timely arrival of the Tick Tock Croc, which sends Hook fleeing back to his ship.
In a moment of honor, the chief of the Indians bestows upon Peter the title "Flying Eagle." Back on his ship, Captain Hook learns about Tink's banishment and hatches a plan to use her desire for freedom against her. Tricking Tink into revealing Peter's hideout, he captures the Lost Boys and the Darling children, leaving behind a booby trap intended for Peter.
However, Tink's brave spirit allows her to escape in time to warn Peter about the impending danger. Although gravely injured in a bomb blast that devastates parts of the island, her resilience shines through when Peter rescues her. Together, they embark on a daring mission to save their friends from Hook’s clutches.
In an epic clash, Hook challenges Peter to a fair fight, betting that Peter won’t flee. However, when Peter deftly ties up Hook using pirate flags, Hook finds himself defeated and vows to vanish, but not without another sneak attack that leads to his imminent demise in the jaws of the hungry Croc.
Using her pixie dust, Tinkerbell lifts the ship into the skies, allowing Peter to escort Wendy, Michael, and John back home. Upon their return, Mary and George arrive home after a social outing, only to be drawn into Wendy’s fantastical adventures. As they process her wild tales, they are astonished to spot Peter Pan’s ship gracefully sailing away amidst the clouds, rekindling a forgotten childhood memory in George that he had seen the very same ship many years prior.
