The Darling household is a place of joy, consisting of the three children, Wendy, John, and Michael; the practical and sometimes stern father, Mr. Darling; the loving mother, Mrs. Darling; and the children’s nurse, a dog named Nana.
But sneaking into the children’s bedroom at night to listen to Mrs. Darling’s bedtime stories is Peter Pan. One night, Nana and Mrs. Darling see him and try to stop him, but are only able to catch his shadow as he flies out the window. So they roll it up and put it in a drawer. Peter, of course, wants his shadow, and returns later after Mr. and Mrs. Darling have left for a dinner party. He brings with him his not-very-polite fairy, Tinker Bell. However, when he finds his shadow, he can’t make it stick to him and wakes Wendy as he begins to cry.
Peter is entranced by Wendy and tells her that he had run away the day he was born because he heard his parents talking about all the things he would do when he was a man, and he went to live with the fairies so that he would never have to grow up. Now he lives in the Neverland with the lost boys, children who fell out of their perambulators and were never found again.
Wendy sews Peter’s shadow back to him, and then Peter convinces Wendy and her brothers, by teaching them how to fly, to return to the Neverland with him and Tinker Bell. So off they fly, over the rooftops of London to the Neverland, where the lost boys share the island with the mean pirates, led by Captain Hook, and with the very British Picadilly Tribe, led by their chief and princess, Tiger Lily. It was Hook’s greatest desire to capture Peter Pan and his friends because it was Peter who had cut off Hook’s hand and fed it to a crocodile. The crocodile had so liked the taste of the hand that he followed Hook everywhere, waiting for the rest of him. The crocodile had, unhappily, also swallowed a clock, and its ticking warned Hook of any approach.
To this magical land Wendy and her brothers fly with Peter Pan. The lost boys, seeing Wendy and spurred on by a jealous Tinker Bell, think her a giant bird and shoot her with a bow and arrow. Peter arrives immediately and sees that Wendy is only stunned, and, after banishing Tinker Bell for a week, he tells the others that he has brought Wendy to them. They quickly build her a house and ask her to be their mother. However, Hook and the pirates have their own plans and plant a green poison cake near the new house.
The boys, when they find it, are excited and ready to eat it up, but Wendy, the good and wise mother, stops them and puts them to bed, after singing beautiful lullabies.
The next day, Peter takes Wendy to Marooner’s Rock to see the mermaids. While there, the pirates bring in Tiger Lily, who they have bound and are leaving on the rock to drown at high tide. Peter saves her, and she and the rest of the Picadillies become their friends and guardians.
Eventually, the children begin to worry about their parents and to feel the pangs of homesickness; and they decide it is time to return to their warm beds in London. The lost boys decide to go with them, but Peter will not hear of going if he will have to grow up. Hook and the pirates, however, foil their plans and capture all the children and take them to their ship. Only Peter, with Tinker Bell’s help, avoids capture.
The pirates are about to have their captives walk the plank, when Peter arrives and saves them. In the final fight with Hook, Peter forces the pirate captain to the edge of the ship where he hears the ticking of the crocodile and, unnerved, falls into its waiting jaws.
The three children then return home, along with the lost boys, who the Darlings adopt. Peter stays in the Neverland, coming to visit Wendy on occasion, but she soon turns into an adult and mostly forgets Peter. However, she has a daughter, Jane, who dreams of pirates, Indians, and magical places far away . . .