The movie opens with a narration from an unnamed character who begins telling the backstory of Jim Hawkins and his mother after his father passes away. He then proceeds to introduce Billy Bones who comes across the Admiral Benbow Inn where Jim invites him in. Once inside, Bones offers to give Jim a silver penny if he reports a man with one leg. During his stay, Bones stays hidden and Jim counts the legs of people that walk by the inn.
One night, Jim presents Bones with his bill, which he tries to avoid paying. He quickly learns that Jim has a photographic memory and his mother is trying to get him into a good school. As a contribution for Jim's education, Bones donates a couple of gold coins to the Hawkins. Just then, a blind man named Pew walks in, looking for Bones. He tells Mrs. Hawkins that there are a couple of pirates waiting outside for him to which she assures him by saying she'll tell Bones. Thanks to Jim's whit, though, he and his mother disguise Bones in Mrs. Hawkins' dress, which fools the pirates and Bones successfully escapes.
After Bone's departure, Jim and Mrs. Hawkins gather their furniture and block the front door. The pirates attempt to break it down, but they flee when they see someone headed their way. It's revealed that Bones went to Dr. Livesly and Squire Trelawny and told them about the pirates attacking the inn. Jim shows both men a treasure map, which Bones gave to him for safekeeping, and everyone is invested in recovering the treasure. Mrs. Hawkins initially refuses to let Jim go on the expedition, but Trelawny reassures her that he'll be safe with him and Livesly, which wins her over.
At the docks, Livesly, Trelawny and Jim meet Captain Smollet, a short man with a predjudice against tall people. He instantly takes a liking to Jim and jockingly asks him not to grow up on the voyage. He then takes them aboard The Hispanola where Jim meets Long John Silver and his talking parrot Flint, the narrator. Jim notices instantly that Silver has one leg, which makes him remember Bones talking about a one-legged man, and he becomes nervous. However, Silver's jolly demeanor and cheerful smile calms him down, which results in Jim liking him. Silver asks Jim for advice on how to win over Smollet's favor and Jim responds by telling him about the captain's disdain towards tall people. He then proceeds to tell a made-up story about having a short father and the disadvantages of having tall family members. This, of course, wins Smollet over and he grants Silver permission to enlist more crewmembers for the ship.
Later that day on the deck, Jim runs into Pew who doesn't see him. He goes to Silver and tells him about Pew's presence. Silver tells him he'd go tell Smollet about pirates being aboard the ship, but he has to worry about losing his supply list. Jim offers to write a new supply list, with the use of his photographic memory, for Silver while he talks to Smollet. Once Silver leaves, Flint and a mouse named Biscuit start talking to Jim.
On the deck, Livesly asks Jim to get the captain some apples. Jim gets into the apple barrel when he overhears Silver's conversation with the same pirates that were after Bones. They reveal that they're planning a mutiny against the crew and will kill them all. One of the pirates, George, gets up and tries to get some apples, but can't get any because the barrel has a few apples left. Another pirate, Hands, offers a latern, which allws George to get one apple. Thankfully, Smollet anounces land's ahead and the pirates leave.
In Smollet's cabin, Jim tells the crew about the pirates' plan. Smollet decides they should pretend to no't know about the pirates and wait for the right moment to strike. They also decide to have Jim spy on the pirates so they can keep tabs on them. Then Jim comes up with the plan to sneak onto the island and fight the pirates from the stockade marked on the map. In order to get off the ship, though, they have to put a sleeping potion in the cheese soufle.
After all the pirates except George had fallen asleep, the animals, including a cat named Dickens, outsmart George and cause him to fall overborard. All the crew members then load a boat with supplies and row towards the island. They get to the stockade, but are soon attacked by the pirates. Silver offers to spare them if they hand over the treasure map. Smollet declines and the crew starts attacking the pirates. They shoot at the pirates until they use up all their ammo. They all engage in a swordfight, but the pirates retreat, vowing to finish them in the moring. Silver tells them that they have until the morning to surrender the map.
That night, Jim sneaks out of the stockade with the map and heads to the pirates' camp, hoping to settle the dispute them. He runs into a crazy man named Ben Gunn who says he's going to warn the crew in the stockade about the pirates, unaware of the situation. Just then, a laidback chimp named Friday comes down from a tree and explains Ben's situation and welcomes Jim to the island. Jim tells Friday he needs to find the pirates and he leads the group to the camp.
Jim arrives at the camp and burns the map in front of the pirates. Unfortunately, since Silver knows about Jim's incredible memory, he takes him as a hostage. George threatens to hurt Jim, but Silver tells him he won't allow any harm come to Jim. The other pirates angrily proclaim that they'll allow Jim until sunrise to tell them where the treasure is. Jim refuses and Friday knocks Silver out, allowing Jim to escape.
Jim then follows the map's directions with the pirates following him. The animals use the various holes Ben had created to stall the pirates. However, when Jim and the pirates find the area in which the treasure was marked, they discover that the treasure isn't there. Just then, when the pirates threaten Jim and Silver, the crew attacks them. Despite his kind behavior towards Jim, Silver surrenders himself to Smollet. Friday then reveals that he knows where the treasure is, which is in Ben Gunn's cave, and leads everyone to it.
On the ship, Ben becomes the new chef and works with Biscuit. During the voyage back home, Jim and Silver share one more conversation before Jim decides to release Silver. They bid farewell and Jim watches him row away. Once home, Smollet, Livesly and Trelawny use their share of the treasure to fund sea voyages, hospitals and orphanges, but Trelawny uses most of his share to buy wigs. Dickens, Ben Gunn and Biscuit all reside in the inn with Jim and his mother. The other pirates work at the inn as employees.Finally, thanks to the treasure, Jim went to school and became a famous author.
Jim Hawkins- a bright young boy with a photographic memory.
- Flint the Parrot has more dialogue than Jim Hawkins, the protagonist and original narrator of Robert Lewis Steven's Treasure Island.
- Long John Silver is more friendly and charming than his original character disgn.
- No one dies in this version, not even any of the pirates. They all walk free.
- Ben Gunn has a less active role in here as opposed to his other variations. Instead, he's replaced by Friday the Monkey.
- The entire cast is divided into three groups of four: Jim, the captain, the squire and the doctor are the Englishmen; Silver, Pew, George (Merry) and Hands are the pirates; and Flint the Parrot, Biscuit the Mouse, the Cat and Friday the Monkey are the animals. The others are Mrs. Hawkins, Ben Gunn and Billy Bones.
- Elizabeth Daily, voice actress of Tommy Pickles from the Rugrats and Buttercup from The Powerpuff Girls, voices Jim Hawkins.
- Silver calls the pirates the Three Stooges. Treasure Island was originally published in 1883 and the Three Stooges existed in the early 1900s.
- When the pirates are looking for Jim and the treasure, there's one pirate that was never on screen before.