This is a live action version of story of Peter Pan. The film opens with Peter Pan flying from Neverland to London at the dawn of the 20th century. He happens upon a house where he finds Wendy Darling telling a story about Neverland to her brothers John and Michael. When Peter makes himself known to the trio, Wendy asks if they can go to Neverland with him. Peter says they can. After this, they fly out of the bedroom back to Neverland.
However, Peter's sidekick Tinkerbell is not pleased to have to put up with Wendy, as Wendy is quite pretty. Tinkerbell instructs the Lost Boys to shoot at Wendy as Peter and his English friends appear on the horizon. Wendy survives, and the boys, who are now sorry for what they have done, ask Wendy to be their mother. However, while she is telling them stories, Peter and Tinkerbell have a heated discussion and Peter Pan disowns Tinkerbell.
Next, Tiger Lily captures John and Michael, and then all three are captured by the villainous Captain Hook, who proceeds to give them one of the traditional Pirate deaths: binding and gagging all three of them to wait for the high tide to come to drown them. Peter Pan shows up to fight and nearly gets his headed handed to him, though he is rescued by a timely arrival of the alligator that bit off Captain Hook's hand.
Wendy and Peter Pan that night go down to a place called Pixie Hollow. Hook shows up to spoil the fun and Peter tells him that he and Wendy aren't a couple. Wendy, distraught, attempts to get home. Peter goes into a depression, and in the climatic duel with Captain Hook, he nearly loses. However, a hidden kiss from Wendy restores his confidence and Hook is vanquished.