It's long ago and Wendy Darling (RACHEL HURD-WOOD) is a young girl sharing her London home with her two younger brothers, John (HARRY NEWELL) and Michael (FREDDIE POPPLEWELL). Her pushy Aunt Millicent (LYNN REDGRAVE) doesn't think that or Wendy's desire to be a novelist is proper or fitting for a young woman. Thus, she informs Wendy's parents (JASON ISAACS & OLIVIA WILLIAMS) that Wendy should have her own room. That and other events eventually cause her father to tell Wendy that it's time for her to grow up.
Then, on the last night of sharing the room with her brothers, a figure suddenly appears at the window and then inside. It's Peter Pan (JEREMY SUMPTER), a boy who's never grown up and can't control his own shadow. After Wendy helps him capture it, he invites her and her brothers to return with him to Neverland where they'll never have to worry about adults or related issues again.
Despite Peter's fairy friend, Tinker Bell (LUDIVINE SAGNIER), being jealous of Wendy, Peter enables her and her brothers to fly and soon they're off for Neverland. There, they meet the Lost Boys - Slightly (THEODORE CHESTER), Nibs (HARRY EDEN), the Twins (LACHLAN AND PATRICK GOOCH), Curly (GEORGE MacKAY) and Tootles (RUPERT SIMONIAN), as well as Tiger Lily (CARSEN GRAY), an Indian.
Their arrival causes a change for the better in the weather and signals Captain Hook (JASON ISAACS) and his crew of pirates, including the likes of Smee (RICHARD BRIERS) and Cookson (BRUCE SPENCE), that their archenemy, Peter Pan has arrived. Ever since a huge crocodile bit off the Captain's hand, Hook has wanted his revenge on Peter.
From that point on and while trying to persuade both Tinker Bell and Wendy to help him, Hook sets out to capture and kill Peter at any and all costs.