Michael has a recurring nightmare, which seems to be coming true.

While exploring a cave, Peter, Slightly, and John open a treasure chest that contains the ghost of Captain Patch (a.k.a. Jaspar Hook). Patch's ghost has grown powerful enough to summon his old ship The Rake from beyond to help him exact revenge on his younger brother James for murdering him years ago. The evil ghost won't stop at destroying Hook and the Jolly Roger – all of Neverland is at risk. To survive this threat, Peter Pan and Captain Hook must combine forces and banish Patch forever.

Cookson poses as a shaman.

Hook draws up a phony treasure map in order to lure Peter and the Lost Boys into a trap.

Peter steals Hook's picture of his mother.

Peter steals the pirates shadows, but they are more dangerous than he realizes.

Peter tricks Hook into thinking his mother wanted him to be a pilot, instead of a pirate.

The Lost Boys build a sub to explore the sea while Hook tries to fly to the moon.

A mysterious swordsman appears and challenges Peter to a duel...and wins!

Peter and Wendy are playing hide and seek with Tiger Lily and Hard-to-Hit. A No Flying rule is in place to give the Indians a fair chance, but Peter breaks the rule in order to win the game. Hard-to-Hit gets really angry about this and claims that Peter could never win anything without his flying power. This brings about a contest in which an earth-bound Peter and Wendy race Hard-to-Hit and Tiger Lily in retrieving various artifacts around Neverland. Unfortunately, the competetive boys make each round more dangerous since there is never a clear winner to the race.

A clever trap set by the Lost Boys looks like it will spell the end of Captain James Hook. But Hook manages to save his life by making Peter's look incomplete and meaningless by comparison. A stunned Peter fantasizes about growing up and experiencing a full life like Hook's. His fantasy soon becomes a reality as he begins rapidly aging; as he does, all of Neverland begins fading away...

The pirates capture Wendy and most of the Lost Boys while investigating the change in the island. When Hook learns that Peter Pan is growing up, he realizes that Peter no longer has a unique edge and can be beaten. Meanwhile, the Twins fly to Monday Island so learn how to restore their leader and their home. They find out that the fate of Neverland and all its inhabitants now hinges on Peter's bond with the ailing Tinker Bell.