As the narrator tells the viewing audience, the action about to take place "has happened before, and will all happen again", only now it will happen in Edwardian London, in the neighborhood of Bloomsbury, where George and Mary Darling's preparations to attend a party are disrupted by the antics of the boys, John and Michael, acting out a story about Peter Pan and the pirates, which was told to them by their older sister, Wendy. Their father, who is fed up with the stories that have made his children less practical, angrily declares that Wendy has gotten too old to continue staying in the nursery with them, and it's time for her to grow up and have a room of her own. That night, they are visited in the nursery by Peter Pan himself, who teaches them to fly with the help of his pixie friend, Tinker Bell, and takes them with him to the island of Never Land.

A ship of pirates is anchored off Never Land, commanded by Captain Hook with his sidekick, Mr. Smee. Hook boldly plots to take revenge upon Peter Pan for cutting off his hand, but he trembles when the crocodile that ate it arrives; it now stalks him, hoping to taste more. Hook also forms a plan to find Peter's hideout using the knowledge of Tiger Lily. The crew's restlessness is interrupted by the arrival of Peter and the Darlings. The children easily evade them, and, despite a trick by jealous Tinker Bell to have Wendy killed, they meet up with the Lost Boys: six lads in animal-costume pajamas, who look to Peter as their leader. Tinker Bell's treachery is soon found out, and Peter banishes her "forever" (though she is eventually forgiven). John and Michael set off with the Lost Boys to find the island's Indians, who instead capture them, believing them to be the ones responsible for taking the chief's daughter, Tiger Lily. Big Chief, the Indian chieftain and Tiger Lily's father, warns them that if Tiger Lily is not back by sunset, the Lost Boys (along with John and Michael) will be burned at the stake.... [continues]

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