The film opens with Jiminy Cricket sitting in a library singing "When You Wish Upon A Star". Addressing the camera, he starts to tell the audience why he believes in such a thing. Opening up a storybook of "Pinocchio", he explains how he came to the house of woodcarver Geppetto and his pets Figaro the cat and Cleo the fish. Geppetto has just made a little wooden puppet called Pinocchio, whom he loves dearly ("Little Wooden Puppet"). Before he goes to bed, Geppetto wishes upon the evening star that Pinocchio would become a real, live boy. As Geppetto sleeps, the Blue Fairy arrives and grants the wish partially; Pinocchio has come to life, but he is still a puppet and must prove himself worthy before becoming a real boy. However, being naive, he requires some guidance, and the Blue Fairy appoints Jiminy Cricket to be his "conscience". The cricket tells Pinocchio that anytime he needs Jiminy, all he needs to do is whistle ("Give a Little Whistle").
The next morning, Geppetto sends his son off to school. But Jiminy Cricket is still asleep! Pinocchio, alone and full of good intentions, heads off to school, but is sidetracked by the wily fox John Worthington and his simpleton accomplice Gideon the cat. Recognizing his uniqueness, the smooth-talking crooks decide to sell Pinocchio to marionette master Stromboli, whose travelling show is in town. Convincing Pinocchio that this is his chance to become an actor, Honest John and Gideon take the puppet to Stromboli ("Hi-Diddle-Dee-Dee"). Jiminy Cricket jumps in and tries to stop Pinocchio from being taken away, but he is too late; Pinocchio becomes a success as part of Stromboli's show, dancing alongside normal puppets in a European-themed musical extravaganza ("I've Got No Strings"). Jiminy Cricket, feeling that he failed at his job, walks off into the night.
Pinocchio tries to return home to Geppetto. Stromboli, not wanting to lose such a cash cow, locks the puppet in a bird cage. Alone in Stromboli's dark and damp...
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