It looks like Captain Hook finally will be defeated once and for all. The Lost Boys have tied the pirate to a tree, and Peter is using one of the Twins' inventions to fire spears at the helpless villain. But instead of panicking, Hook calmly assures Peter that he will die contentedly since he has lived a full life as a child, youth, and man. He doesn't envy his arch nemesis – Peter's existence will always be limited since he's stuck being a boy forever.
This speech really gets to Peter, who surprises the Lost Boys by sparing Hook's life and leaving without any explanation. Hook then sets himself free through an impressive feat of strength that scatters the Lost Boys. Back at the tree house, Peter is obsessing over the captain's words and starts drawing lines on his face to make him look old. Wendy and Tinker Bell make fun of Peter for this, causing him to get so mad that he storms off and starts wandering around the island. The children get worried and start looking for their leader.
Suddenly, Tinker Bell starts losing her magic. Afraid that the others will no longer believe in her, she leaves the group; now the children have two friends to search for. The pirates are also experiencing strange troubles: they can't row the longboat to shore because all of the water is draining away. We learn the cause of all the problems when the Darlings and Lost Boys find Peter. Our hero was so determined to grow up that he's actually aged into a teenager in a matter of hours! He no longer believes in magic and is only interested in finding people his own age to hang out. Much to everyone's shock, Peter ignores their concerns and heads back into the forest without caring about what's happening to him.
As Peter loses faith in his childish beliefs, Tinker Bell gets weaker while all of Neverland grows overcast and begins to wither away. Wendy and the Lost Boys have lost their power to fly and are trying to find their way home by walking. The pirates, who have no idea what's happening, abandon the longboat and just walk ashore. They hear Peter crying for help in the woods and see the island disappearing all around them. Smee stumbles across the weakened Tink in the woods. She asks the pirates if they believe in Neverland; when they say yes, she is suddenly restored and able to escape. The island has also been temporarily rejuvenated (meaning the water has returned and the pirates are getting awfully wet). Tink flies off in search of Peter, who by now has aged into a full-grown adult!