An old carpenter passes a strange piece of talking wood to his neighbor Geppetto, a poor wood carver, who shapes it into a marionette he names Pinocchio. The puppet is mischievous before he is even finished: he snatches Geppetto's wig, kicks him, and the moment his legs work he bolts out the door, leaving his maker arrested in the confusion. From his first hour Pinocchio is willful, ungrateful, and desperate to avoid anything resembling discipline.
Back home, a Talking Cricket who has lived in the room for a hundred years warns him that boys who refuse their parents and hate study come to bad ends. Pinocchio answers by throwing a hammer and killing it. So begins a chain of escapades in which he repeatedly chooses amusement over school: he sells the schoolbook Geppetto bought by selling his coat, runs off to a puppet show, and is nearly burned as firewood before the showman gives him five gold coins to take home.
On the road he meets a lame Fox and a blind Cat, con artists who promise that his coins will multiply if he buries them in the Field of Wonders. They rob him, and worse follows. He is hanged from an oak by assassins, rescued by the Lovely Maiden with Azure Hair, and caught lying to her, at which his nose grows longer with each falsehood. Again and again the Fairy gives him another chance, and again and again his good intentions collapse the moment temptation appears.
The pattern reaches its lowest point in the Land of Toys, an idle paradise that Pinocchio enters with his classmate Lamp-Wick despite knowing better. After months of nothing but play, both boys sprout donkey ears and are turned into actual donkeys, sold off to labor. Pinocchio is worked, lamed, thrown into the sea, and at last swallowed by the Terrible Shark, in whose belly he is reunited with Geppetto, who had sailed out searching for him and been swallowed too.
Carrying his weak father to safety, Pinocchio finally lives the life the warnings had urged. He draws water at a farm for a daily glass of milk, weaves baskets, studies at night, and saves his coins, even giving them up when he hears the Fairy is ill. One night he dreams the Fairy praising his kind heart, and wakes to find himself no longer a puppet but a real boy, with Geppetto restored and the old wooden figure slumped lifeless in a corner.