When a large log finds itself at his doorstep, elderly craftsman Geppetto (CARLO GIUFFREŽ, voice of DAVID SUCHET) decides he'll carve a puppet from it. Naming his creation Pinocchio (ROBERTO BENIGNI, voice of BRECKIN MEYER) and imagining him as the son he never had, Geppetto is surprised when the puppet comes to life as an eager but mischievous boy.
He ends up selling his coat so that Pinocchio can attend school, but the puppet doesn't want to go and ends up falling prey to various distractions, including the efforts of the Fox (MAX CAVALLARI, voice of CHEECH MARIN) and the Cat (BRUNO ARENA, voice of EDDIE GRIFFIN) in conning him out of his money.
Pinocchio does have help along the way, however, in the form of the talking Cricket (voice of JOHN CLEESE) who serves as his conscience of sorts. Then there's the magical Fairy (NICOLETTA BRASCHI, voice of GLENN CLOSE) who periodically saves him from his various predicaments and wants to use her powers to transform him into a real boy, but will only do so when he shows that he can be good.
He tries to do so, but repeatedly ends up meeting various interesting characters, such as Leonardo (KIM ROSSI STUART, voice of TOPHER GRACE), a young thief, who tempt him with various opportunities that threaten to further corrupt him. With Geppetto out searching for his missing boy, Pinocchio eventually realizes that lying and other forms of bad behavior aren't nice and then sets out to prove that he's worthy of the Fairy's magic.