Sometime in the future, after the polar ice caps have melted, flooded coastal cities and reduced natural resources, androids have become commonplace since they're never hungry and don't consume commodities. Since reproduction is also legally restricted, the perfect solution for anyone wanting their first or an additional child would obviously be to have a robotic one. Yet, since robots don't love, Professor Hobby (WILLIAM HURT) of Cybertronics Manufacturing has come up with a solution -make one that does and can consequently be loved back by its parents.
Monica (FRANCES O'CONNOR) and Henry Swinton (SAM ROBARDS) are one such couple in need. Their young son, Martin (JAKE THOMAS), is in suspended animation due to some illness or injury, and Henry agrees to take home the latest such "mecha" model named David (HALEY JOEL OSMENT). At first, Monica hates the idea and is unnerved by the boy who looks real on the outside, but is completely artificial under his skin.
Yet, she eventually warms up to him and decides to go through with an imprinting process - that can't be reversed or deleted - where David will see and love Monica as his real mother. Although David's behavior is still a little odd as he observes and learns, things seem to be progressing just fine, even causing Monica to give him Martin's old "Super Toy," Teddy (voice of JACK ANGEL), a fully mobile, self-sufficient teddy bear.
Then comes news that Martin has emerged from his coma or illness and returns home, instantly generating some sibling rivalry within the real boy. After several accidents and odd occurrences, the Swintons decide they must get rid of David. Knowing that he'll be destroyed if taken back to Cybertronics, however, Monica dumps the android in the woods. Believing if he'd become human like Pinocchio his mother would love him, David pleads for her not to leave, but it's to no avail.
From that point on, David sets out to find the Blue Fairy from that story whom he believes can turn him into a human. As he does so, he makes a strange ally in Gigolo Joe (JUDE LAW), a love android programmed to please the ladies but now on the run from the law, and has run-ins with various sorts of characters, including Lord Johnson-Johnson (BRENDAN GLEESON), the emcee of the Flesh Fair where angry humans cheer on the demise of robots they fear are out to replace them.