It is World War II in the 1940s, and Wendy Darling has grown up. Her husband, Edward, is sent to fight in the war. Wendy tries to keep her children's spirits up with stories of Peter Pan, but Jane, her daughter, has become cynical under the pressures of the war, ignoring the stories her mother tells and unintentionally ridiculing her brother, Danny's faith in them. Jane has promised her father that she'll take care of her mother and family while he was gone. But when Wendy tells her that she must be evacuated to the countryside for her safety, Jane lashes out on her and at Danny, which leaves Usagi and friends in a disappointment.
That night, Captain Hook, still seeking revenge against Peter Pan and Sailor Moon and the Sailor team, breaks into the Darling home, and kidnaps Jane, Rini, and Hotaru, while they were sleeping, believing Jane to be Wendy. Smee ties them up and gags them, and Hook flies back to Never Land on his ship to use as bait for Peter. Meanwhile Usagi and friends are shocked to find the Nursery empty and the window wide open. Usagi and the team finds out that Captain Hook kidnapped them, they quickly transform and quickly head to Neverland. Back in Never Land, Captain Hook drops Jane, Rini and Hotaru into the waiting tentacles of "the beast" (a giant octopus), expecting Peter to also be devoured by it as he dives down to save them, along with Tinker Bell. Peter rescues the girls, and the octopus tries to eat Hook instead, but Hook is rescued by Smee. However, the octopus enjoys the taste of Hook so much (just like the crocodile) that he decides to go after him. Sailor Moon and the team spotted Peter Pan and the girls and thanks him for saving them. Meanwhile, upon finding Jane is Wendy's daughter, Peter assumes she would like to follow in her mother's footsteps. He and the team takes her to his home to be the mother for the Lost Boys, but Jane refuses, because she is more interested in getting back home. They try to teach her to fly, but she fails due to her rather pessimistic outlook. The boys then play a game of keep away with her, resulting in her notebook being destroyed and causing her to lash out angrily at the boys. In her anger, she states that does not believe in fairies, which is a death sentence for all fairies, then storms off, leaving Tinker Bell to die until Peter tells the boys they have to make her part of the group.
After Jane leaves them, she is approached by Hook, who tricks her with a deal. He promises to take her home and not harm Peter, Sailor Moon, and the Sailor team. if she agrees to help him find his treasure. He gives Jane a whistle to signal him when she finds it. The Lost Boys and the team search for Jane and eventually Peter finds her. Jane suggests they play a game of "treasure hunt". Peter, the Lost Boys and the team show her the fun they have and she changes her ways. When Jane finds the treasure, she throws away Hook's whistle, refusing to help him. Peter, Sailor Moon, the Sailor Scouts, and the Lost Boys make Jane the very first Lost Girl (as a coyote) and they celebrate. However, Toodles finds the whistle and blows it. Hook and his crew arrive and capture Peter, the boys, Sailor Moon, and the team, but let Jane go as a thanks for "helping" them. Despite Jane denying that she wanted to help Hook in this way, Peter calls her a traitor for lying to them and Sailor Moon tells her that since she said that she does not believe in fairies, Tinker Bell is dying.
Jane, realizing it is her fault, rushes to the Lost Boys' home, and her repentant tears and renewed belief revive Tinker Bell. They both hurry to the Jolly Roger, where they find the Lost Boys and the Sailor team tied up and Peter and Sailor Moon (tied to an anchor) about to walk the plank. Jane saves him and with the help of "faith, trust, and pixie dust," she learns to fly and unties Peter. Hook's ship is sunk by the octopus, leaving him and the pirates to exit on a rowboat with the octopus pursuing them. Jane return homes to her family. After Jane apologizes to them for her selfishness, Wendy and Peter meet again for the first time in over thirty years. Though Peter is disappointed that she has grown up, Wendy assures him that she has not really changed. Tinker Bell sprinkles her with pixie dust, and Wendy shows that even as an adult she can still fly. Peter understands that though Wendy has grown up, she is still young at heart and still believes, and leaves after one last goodbye (and although this is not until Peter flies away, Danny manages to see him and Tinker Bell). Edward has returned from the army. The family is reunited as Peter and Tinker Bell fly off into the night. Sailor Moon and the team says farewell to them before they went to their next adventure.