When the Darling kids are caught in a squabble with their mother over the cleanliness of their room, they fly off to Neverland at the first opportunity to escape. The children enter Neverland to find a very unhappy Hook.

Wendy, Michael, John and Tiger Lily want to give Peter Pan the best surprise birthday he can have and to make him realise that growing up is not all that bad.

One night just as Wendy is about to fall asleep, she hears Michael whimpering, talking and crying in his sleep. Before Wendy can find out what's wrong, Peter Pan shows up asking Wendy, John and Michael for help since the Lost boys have gone missing.

Michael is being a brat, troubling people at school and at home. But Michael blames everything on Wendy claiming that she never spends time with him anymore. To cheer everyone up, Peter takes them to Neverland.

One night, when Wendy is sad and upset, her brothers try to do everything to cheer her up but to no avail. Fortunately a very perky Peter Pan shows up just in time to take them to Neverland but even the thought of Neverland isn't cheering Wendy up.

In his book about Neverland, John learns of a saber that belonged to Long John Pepper. Legend has it that whoever finds the saber, will be granted with immense power. Back in Neverland, the Indians organise a festival.