Troubled by a strange recurring dream, nineteen-year-old Alice Kingsleigh attends a party that she is told is an engagement party to wed her to Hamish Ascot, whose family now owns her deceased father's trading firm. Unsure of how to reply, she runs away to chase after a rabbit, and accidentally falls into a rabbit hole. The hole transports her to a small room with many doors in a world called Underland. The only unlocked exit is too small, causing Alice to use a series of potions to shrink and escape. Upon exiting, she is welcomed by Nivens McTwisp (the White Rabbit), Mallymkun (the Dormouse), Uilleam (the Dodo), Tweedledum and Tweedledee, who question her identity as "the right Alice." They take her to Absolem the Caterpillar, who consults the Oraculum (a calendar-like scroll which details every day in Underland) and decides that she is "not hardly Alice." He also reveals that on the Frabjous Day, a hero named Alice will slay the Red Queen's Jabberwocky. The group is then ambushed by the Bandersnatch, Jubjub bird and a group of playing-card soldiers led by Ilosovic Stayne, the Knave of Hearts, who kidnap the White Rabbit, the Dodo, two flamingos and the Tweedles. The Bandersnatch chases Alice but is stopped when the Dormouse stabs out its eye.
Meanwhile, Iracebeth the Red Queen, who has conquered Underland by stealing the crown from her sister Mirana the White Queen, is informed by the Knave of Hearts that Alice has returned to Underland, causing her to send Bayard the bloodhound to find her. The wandering Alice encounters the Cheshire Cat, who takes her to a tea party, where she meets the Mad Hatter, March Hare, and the Dormouse (who has the Bandersnatch's eye attached to her belt). The Hatter decides that she is "absolutely Alice," settling any doubt. When Bayard and the Queen's troops arrive, the Hatter hides Alice inside a teapot and manages to persuade Bayard not to reveal her. The Hatter agrees to take Alice to the Red Queen's castle to rescue her captured friends, and helps Alice avoid capture by the Red Queen's forces by placing her onto his hat and flinging it across a lake just before he himself is seized. The next day, Alice is found by Bayard, who aids her in secretly infiltrating the Red Queen's castle.
The White Rabbit, now a page for the Red Queen, finds the tiny Alice in the garden, and gives her a cake that causes her grow larger than normal. The Red Queen notices the commotion but is unaware of her identity and welcomes her as a guest instead. The Hatter persuades the Queen to let him serve as her personal milliner in an attempt to delay his execution. Alice learns that the Vorpal Sword is locked away in a case inside the Bandersnatch's den, so she returns its eye and in turn, it allows her to retrieve the key, unlock the case and retrieve the sword, while becoming her ally. The Knave, having unsuccessfully tried to seduce Alice earlier, sees she has the Vorpal Sword and attempts to stop her; during the ensuing fracas, the Dormouse inadvertently reveals Alice's true identity. The Bandersnatch fights off the Red Knights and escapes with Alice, who then delivers the Vorpal Sword to the White Queen, and is returned back to her normal size. The Cat saves the Hatter and the Dormouse from execution, and they lead all of the enslaved Underland creatures to the White Queen's castle. Alice meets once more with Absolem (while entering his pupa stage), who reminds her of past visits to Underland, which she mistakenly called Wonderland, and helps give her the courage to fight the Jabberwocky.
When Frabjous Day arrives, both the White and Red Queens, who have gathered on a chessboard-like battlefield with their armies, choose their champions, Alice and the Jabberwocky respectively, to decide the fate of Underland. The White Queen offers her sister a chance for peace but is refused. Alice strikes first with the sword, slicing off the Jabberwocky's tongue, but the beast soon regains the upper hand, at which point the Hatter interferes, starting an all-out brawl between the two sides. The Hatter fights and overcomes Stayne, while Alice manages to climb onto the Jabberwocky's neck, allowing her to cut off its head. The White Queen banishes the Red Queen and Stayne to the Outlands, and collects the blood of the Jabberwocky, telling Alice that it will take her home if she chooses to go. The Hatter suggests that she stay on with him in Underland, but she chooses to go home, promising him she'd be 'back before you knew it'.
Alice drinks the blood and returns home, where she refuses Hamish's proposal and becomes an apprentice for Lord Ascot, with the idea of beginning trading with China.