The film begins with a young Alice waking in the middle of the night to tell her father that she is having a nightmare. He interrupts a business meeting about foreign trade routes to tuck her back into bed, where he tells her that she is mad, but that "all the best people are."
The film then jumps 13 years into the future. Alice is almost 20 and is arriving at a garden party with her mother; her father has died. There, Hamish, the son of a business associate of Alice's father, proposes to Alice, in front of all the guests. Alice tells everyone that she needs a moment and begins to follow a white rabbit that is wearing a waistcoat to a tree nearby. Alice falls through the rabbit's rabbit-hole and finds herself in a strange room, too big to fit through the exit door. She finds a bottle that is labeled with a tag "drink me"; she does so, and becomes very small. She then eats a cake that causes her to become large. Eventually, she manages to find the key and get to the right size to go through the tiny door. Opening the door, Alice emerges into a strange landscape, where she is greeted by the White Rabbit, the dormouse, a Dodo Bird and Tweedledum and Tweedledee. They lead her to Absolem, a wise caterpillar, as they believe she could be the Alice they are looking for to restore power to the White Queen, but Absolem doesn't believe she is the one in his prophecy.
Believing she is in a dream, Alice attempts to wake up, but to no avail. Soon after, the Bandersnatch, led by the Knave of Hearts, begins to chase them all down. Tweedledee and Tweedledum are plucked from the ground by the Jubjub bird and taken to the castle of the Red Queen, the reigning tyrant. There the Red Queen learns of the prophecy of Alice defeating her Jabberwocky.
Alice, now alone, meets the Cheshire Cat, who leads her to a tea party with the Mad Hatter, the March Hare, and the dormouse. When they hear the Knave of Hearts coming in search of Alice, the Mad Hatter shrinks Alice and stuffs her in a teapot. The Knave threatens everyone with death if they are hiding her, as his bloodhound, the enslaved Bayard sniffs out Alice. The Hatter urges Bayard to lead the Knave astray, which he does.
With Bayard's help, Alice eventually arrives at the Red Queen's castle. There, she eats a bit of cake and grows much larger. The Red Queen doesn't know who she is and welcomes her into her palace, impressed by her size. There Alice discovers that the vorpal sword, the weapon with which she is meant to slay the Jabberwocky, is locked in the den of the Bandersnatch. When the Knave of Hearts tries to seduce Alice, the Red Queen becomes enraged with jealousy and orders for Alice to be beheaded, but Alice is able to escape and retrieve the vorpal sword with the help of the Bandersnatch, whose trust she has earned. She rides the Bandersnatch to the White Queen's castle.
At the White Queen's castle, Alice learns that she has been to Wonderland before as a child. She hasn't been dreaming any of this, and she suddenly is flooded with memories of Wonderland. She realizes now that this is very real and her destiny is to kill the Jabberwocky. Absolem tells Alice that the vorpal sword knows what it wants, all she has to do is hold on to it. The armies of the Red and White Queens meet on the battlefield for a final showdown and the Jabberwocky is released. Alice must finally face the beast in order to save the kingdom from destruction by the Red Queen and return sovereignty to the benevolent White Queen. Alice does battle with the Jabberwocky and is able to cut its head off.
The White Queen banishes the Red Queen and the Knave of Hearts. When the Knave attempts to kill the Red Queen the Mad Hatter stops him. The White Queen then gives Alice a vial of the Jabberwocky's blood which she is told will grant whatever she wishes. Alice wishes to go back to her life in England.
When she returns to the garden party, Alice declines Hamish's proposal, and decides to expand her father's shipping and trade route with his business partner. She is last seen on a ship heading to China, where Absolem, now a butterfly, lands on her shoulder.
