NEVERLAND

Peter Pan returns to Neverland with Wendy and the boys in tow. The Lost Boys beg Peter to recount his adventures, and he dazzles them with wild stories. The Lost Boys quickly welcome the Darling children into their tribe, asking Wendy to be their mother and she happily obliges. Neverland becomes the scene of a raucous, joyous celebration. 

Peter and the Lost Boys take the Darlings to a mysterious lagoon, where Captain Hook and his pirate crew are plotting to capture one of the enchanting mermaids. They capture the most beautiful mermaid, but her cries quickly call Peter and the others into action. A great battle ensues, with the Lost Boys ultimately prevailing. 

The Lost Boys make their way into their hideout and prepare for bed. Wendy reflects longingly on her home and the parents she has left behind. The Lost Boys decide they want to visit her homeland. Unable to understand why Wendy is unhappy, Peter becomes furious and throws them all out. 

The pirates kidnap the Lost Boys and the Darling children, one by one, as they leave the hideout. Captain Hook personally greets Wendy and begs her sympathy by showing her a story from his childhood, in which his awful schoolteacher beat him on the wrist every time he made a mistake, mangling his hand into the shape of a hook. (This story is told in a play—a ruse in which Hook has his own son, James, stand in for him!) Wendy is much too smart, however, to fall for Hook's ploy, and the pirates tie her up and bring her back to the ship. Hook then sends his son James to Peter Pan's hideout to tempt him into a game of hide and seek. James eventually succeeds in luring Peter from his hiding place and leads him to a potentially terrible fate. 

Back at the pirate ship, as the pirates dance wildly to celebrate their victory, James contemplates his nefarious deeds. Hook tries to lure the Darling children into joining his crusade, but they refuse. He ties them up and abuses them with tales of the horrible things he will do to them. Hook, who hates all children, even mistreats his own son James, as do the rest of the pirates. Hook becomes so distracted with his soliloquy that he doesn't notice when Peter sneaks on board. 

A battle begins, and the Lost Boys quickly gain the upper hand. Sensing the possibility of defeat, Hook tries to escape with Wendy, but Peter intervenes and challenges him to a duel. Hook fights arrogantly, making a great show of his ease, but Peter ultimately triumphs over him— with some unexpected assistance. 

The Darling children go home and reunite with their parents. Although Peter returns to try to lure Wendy back to Neverland, she refuses. She takes her place in her mother's rocking chair, reflecting on her adventures with Peter as she grows older and has children and a family of her own.