Plot
Peter Banning, a workaholic lawyer, has a strained relationship with his wife, Moira, and their children, 9-year-old Jack and 6-year-old Maggie, due to his constant absences and broken promises. During Christmas, the family travels to London to visit Moira's grandmother, Wendy Darling, who cared for Peter as an orphan. When Peter loses his temper with the children for interrupting a work call, Moira scolds him, reminding him how fleeting their time with the children is. During a dinner honoring Wendy's work with orphans, Jack and Maggie stay home with her old friend, Tootles. Returning from the event, Peter and Moira discover the children are missing, with a note left behind in their nursery signed by Captain James Hook.
Wendy divulges to Peter his true childhood identity, Peter Pan, and urges him to return to Neverland to rescue his children because only he can. Having no memory of his childhood, Peter does not believe her until the fairy Tinker Bell arrives and flies him to Neverland. In the pirate town, Peter confronts Hook, who fails to recognize his once formidable rival. Hook challenges Peter to fly and save his children, but Peter fails. Dismayed at how pathetic Peter has become, Hook orders his execution but Tinker Bell convinces him to give her three days to train Peter for their final battle.
Peter is brought to the Lost Boys' hideout, now led by Rufio. They mock the grown man before them until the group ultimately recognizes him. They begin training Peter, urging him to abandon his uptight adult demeanor and embrace his imagination. Meanwhile, Hook's first mate William Smee suggests turning Jack and Maggie against Peter. Maggie resists, but Jack, hurt by Peter's broken promises and failure to save him, begins to side with Hook.
While infiltrating the pirate town, Peter sees Jack playing in a baseball game organized by Hook, who has taken on a fatherly role. Devastated, Peter returns to the Lost Boys' camp with renewed determination. His shadow leads him to the ruins of Wendy's house, where he remembers his past: as an infant in the early 1900s, he ran away from his mother, fearing growing up and dying, and was brought to Neverland by Tinker Bell. Visiting his family later, he found they had a new child and assumed they had forgotten him. Peter met Wendy, who fell in love with him, but as she aged and started a family, Peter fell for her granddaughter Moira and remained with her. Recalling Jack's birth as his happiest memory, Peter regains his powers and ability to fly. That night, a heartbroken Tinker Bell confesses her unrequited love to Peter.
The next day, Peter and the Lost Boys launch an attack on the pirates. While Peter rescues Maggie, Rufio is fatally wounded in a duel with Hook. Witnessing Rufio's dying wish for a father like Peter, Jack reconciles with his father. Peter prepares to leave Neverland with his children, but Hook demands a final battle, vowing to eternally stalk Peter's descendants if denied. With help from Tinker Bell and the Lost Boys, Peter subdues Hook, who feigns surrender. Hook tries to stab Peter, but misses and impales the taxidermied crocodile that once ate his hand. The crocodile briefly appears to come back to life, toppling over and consuming Hook. Tinker Bell then returns Jack and Maggie home while Peter bids farewell to the Lost Boys, appointing Thud Butt as their new leader. Thud Butt gives Peter a bag of marbles that belonged to Tootles, a former Lost Boy.
Peter awakens in London, where Tinker Bell tearfully bids him farewell. Transformed by his journey, Peter joyfully reunites with his family and discards his work phone. He returns the bag to Tootles, who sprinkles the pixie dust within on himself and flies off to Neverland. When Wendy observes that Peter's adventures are over, he replies, "To live will be an awfully big adventure."