Peter Banning (ROBIN WILLIAMS) works to rescue big businesses in trouble, but doesn't realize that his work is making his family unhappy. At his daughter Maggie's (AMBER SCOTT) school play, he promises his son, Jack (CHARLIE KORSMO), that he'll be at his last baseball game of the season, but doesn't show up because of his work.
The Banning family, Peter's wife, Moira (CAROLINE GOODALL), included, fly to London to visit Granny Wendy (MAGGIE SMITH) who's having a wing of a children's hospital dedicated to her. During the event, Captain Hook (DUSTIN HOFFMAN) swoops in from Neverland and kidnaps Peter's children. It is then that Granny Wendy reveals to Peter the part of his life that he doesn't remember: Being Peter Pan.
Tinkerbell (JULIA ROBERTS) then comes in to take Peter to Neverland, where he must learn again to be the boy who didn't want to grow up. At the same time he must earn the respect of the Lost Boys, especially Rufio (DANTE BASCO) who doesn't believe that he's Peter Pan, and eventually battle Captain Hook, who, with Smee (BOB HOSKINS) comes up with a plan to turn his kids against him.