Things aren't going well for Jess Aarons (JOSH HUTCHERSON). A sensitive but sullen boy growing up in a poor farm family, he's hoping to win a big race at school, but his mom Nancy (KATE BUTLER) has thrown out his old shoes and replaced them with a hand-me-down pair from one of his older sisters.
With his dad Jack (ROBERT PATRICK) being somewhat distant and preoccupied with the family finances, Jess is surrounded by females, including his mom, older sisters Brenda (DEVON WOOD) and Ellie (EMMA FENTON), and younger sibling May Belle Aarons (BAILEY MADISON) who just wants to hang out with her big brother.
It doesn't get much better at school. While he has a crush on his music teacher Ms. Edmunds (ZOOEY DESCHANEL), towering school bully Janice Avery (LAUREN CLINTON) torments him when not charging everyone admission to the restroom, and new student Leslie Burke (ANNASOPHIA ROBB) has just beaten him and everyone else in that important foot race. Thus, not only must he deal with that disappointment, but he must also endure the taunting from his classmates, Scott Hoager (CAMERON WAKEFIELD) and Gary Fulcher (ELLIOT LAWLESS), who act like jerks toward him.
Despite Jess initially not liking Leslie for beating him in the race, the two soon become fast friends and escape from their troubles in the nearby woods. There, they find a deserted tree house and make it their own, with Leslie declaring the land to be Terabithia, a world filled with fantastical creatures, both good and bad. Encouraged by their ability to deal with the latter, they then set out to make things right in the real world.