Hugo is the story of a boy named Hugo who ends up living on his own in a train station. The story begins with Hugo's father working in a museum. Hugo's father has a natural talent for creating and repairing mechanical devices, which he teaches to Hugo. During his off time, Hugo's father likes to create his own mechanical inventions. He is currently working on an automation he found, which for some unknown reason will not operate. In an unexpected event, Hugo's father is killed in a fire, which leaves his brother in charge of raising Hugo.
Hugo's brother is an uncaring alcoholic who works in a train station. He is the main timekeeper in charge of making sure all of the clocks are wound every day. When Hugo becomes his responsibility he quickly passes the task of maintaining the clocks onto Hugo, so he can go out drinking with his buddies. One day his uncle does not return, which leaves Hugo on his own in the train station. Hugo decides to keep up the pretense of having his uncle there by keeping the clocks on time. He also has to steal from the shopkeepers in the station in order to survive.
Hugo needs to stay one step ahead of the police who patrol the station for delinquent children. While out and about in the station one day, Hugo discovers a shop that sells small mechanical toys. The man who owns the shop has a goddaughter the same age as Hugo. The two children become friends and embark on an adventure together to unravel the mystery behind the automation his father was trying to fix. The machine needs a special key in order to get it started.
Through a series of events, the children make some surprising discoveries about the automation and its original creator. The machine itself provides clues when the key is found and the device is finally turned on. The automation is a mechanical man who writes a mysterious message. The message, combined with a notebook Hugo's father left behind lead the children to the true creator of the machine.