Alice Kingsleigh (Mia Wasikowska) is the daughter of Charles Kingsleigh (Marton Csokas), a wealthy man who planned to find profitable shipping routes through the world in the 19th century. When she tells him of her adventures in Wonderland (later to be revealed as 'Underland'), he declares her mad, but that all the best people are. However, many years afterward, Charles has passed away, and Alice misses his playful attitude.
Now feeling trapped in a world of proper etiquette for one such as herself, Alice is taken to a garden party, where it is hoped that she will accept a marriage proposal from Hamish (Leo Bill), the son of one of her father's business partners. However, Alice soon grows distracted seeing a rabbit with a waistcoat nearby, and rushes after the strange creature.
Following it, she finds her way to the trunk of an old tree some ways off, and falls down a hole. The hole leads her to a strange room, of which she finds a key, as well as a drink that makes her smaller, and a cake that increases her size. After getting the key and shrinking down to use a small door, she soon finds herself in an enormous garden area.
Soon after, she comes across the White Rabbit (Michael Sheen), as well as the Dormouse (Barbara Windsor), a Dodo bird (Michael Gough), and the Tweedles (Matt Lucas). The White Rabbit explains that is sure he has found the right Alice this time, while the Dormouse believes he is mistaken. Alice explains that her name is Alice, but feels they are looking for another "Alice." They take her to Abosolom the Caterpillar (Alan Rickman), who consults a scroll, which contains details regarding the history of Wonderland, from it's birth onward. The scroll claims that on the Frabjous Day, Alice will return to slay the Jabberwocky. Alice sees this, and adamants that she is not the person in the scroll, when a commotion breaks out, and the Knave of Hearts (Crispin Glover) appears, along with some red-carded soldiers and a creature called a Bandersnatch. Everyone scatters, as the Knave takes the scroll, and captures the Dodo bird. Alice, when confronted with the Bandersnatch, stands her ground, convinced that it is just a dream. However, the creature scratches her, and Alice takes off running, but not before the Dormouse plucks out one of the creature's eyes.
Some ways off, Alice encounters the Tweedles again, who attempt to help her, but are soon captured by a giant bird that takes them to the Red Queen's castle. At the castle, the Knave of Hearts informs the Red Queen (Helena Bonham Carter) about the scroll, and the prophecy of Alice killing the Jabberwocky (of which she possesses). The Red Queen orders Alice to be found, and the Knave utilizes a bloodhound named Bayard (Timothy Spall) to track her down, promising freedom for Bayard's wife and pups (a lie, meant as a way to get the dog to help the Red Queen).
Meanwhile, Alice encounters the Cheshire Cat (Stephen Fry), who leads her to the Mad Hatter's place, where she encounters the Dormouse again, as well as the March Hare (Paul Whitehouse). The Mad Hatter (Johnny Depp) is pleased to see Alice, and is in rapture over the coming Frabjous day in which she will slay the Jabberwocky. Alice again insists she is not 'that Alice,' when the Knave of Hearts and Bayard close in. The Hatter stuffs Alice into a teapot, to hide her from the Knave. In secret, the Dormouse scolds the dog for bringing the Knave there, but Bayard explains why he came. He then attempts to lead the Knave off in a different direction.
After they have left, the Hatter walks Alice through the nearby woods, where they come across the burned ruins of a small village. The Hatter then explains to Alice about how in the time she was gone, the Red Queen has taken over Wonderland, banishing the White Queen (Anne Hathaway) to her own domain, and taking her vorpal sword.
As they talk, the Knave again approaches, and the Hatter places Alice on his hat, and flings it across a river, giving himself up to the Knave, who takes him to the Red Queen. Later on, Bayard finds the hat and Alice. Alice manages to convince Bayard to take her to the Red Queen's castle, to rescue the Hatter. Along with the hat, they find their way there, where Alice encounters the White Rabbit assisting with a game of croquet with the Red Queen. Alice requests to be made larger (she is still the size of a gerbil), and the rabbit gives her a cake. However, she eats too much and ends up almost 10 feet tall, disrupting the croquet game. The Queen does not recognize Alice, who says she is 'Um' from Umbridge, and wishes to help the Queen. The Queen, impressed by the size of Alice's head, declares her to be made part of her royal court.
The Hatter is brought before the Queen and Alice, and is at first intended to be beheaded. However, the Hatter manages to stall for time, by requesting that he make the Queen a hat for her enormous head. Flattered by the attention, she gives into this request. Alice soon after finds out that the vorpal sword is on the grounds of the castle, but is locked away in a chest in the quarters of the Bandersnatch. After procuring the plucked eye from the Dormouse (who has broken into the castle to free the Hatter), Alice manages to return the eye to the creature. This allows her to gain access to the sword. Alice goes to the Hatter's room, and finds the Dormouse there. However, the Knave of Hearts shows up shortly, and when the Dormouse lets slip Alice's true name, he attempts to kill her. Alice manages to escape into the courtyard, where the Bandersnatch helps her escape from the castle. Bayard also accompanies her, as they head for the White Queen's castle.
The Red Queen then orders that the Hatter and the Dormouse be executed the next day. However, the Cheshire Cat uses his trickery to take on the guise of the Hatter, and allows the Hatter, Dormouse, the White Rabbit, the Tweedles, and Bayard's family to escape. They all soon meet up at the White Queen's castle, where the Queen has used her potions knowledge to shrink Alice to normal size.
The next day then dawns...the Frabjous day. Almost everyone is willing to take up arms for the White Queen. However, she hopes that Alice will fulfill the prophecy, but Alice rushes off to the Queen's garden, still upset over everyone pushing her into this task. It is there she encounters Absolom, cocooning himself. It is here that Absolom explains to Alice how she had been to Wonderland before, and suddenly, it all comes back to her, that what she thought originally was a dream was real. After her revelation, Alice dons the armor prepared for her by the White Queen, and takes up the vorpal sword.
Both the White Queen and the Red Queen meet on a checkerboard field. Both Queens meet first, with the White Queen asking her sister to not do battle, but the Red Queen refuses to give into the pacification of her sister's plea. The White Queen brings forth Alice as their 'champion,' as the Red Queen' summons the Jabberwocky. As Alice faces off with the creature, the rest of the armies go to war. Alice plays a mind-game with herself, talking of 6 impossible things, as it is claimed her father would do before breakfast. In her mind-game, she manages to find the strength to slay the Jabberwocky. The Red Queen demands that her subjects kill Alice, but as the White Queen's champion has slayed that of the Red Queen, the Red Queen's subjects will no longer follow her commands.
The White Queen orders the Red Queen banished to the Outlands, for the crimes that she has committed (due to a the White Queen's vow not to harm a living creature, she will not kill her sister), with noone to offer her sympathy. The Knave of Hearts is also chained to her, as punishment as well. However, the thought of being alone with the Queen causes him to try to kill her, before his dagger is taken from him by the Hatter.
After the Red Queen and the Knave are taken away, the White Queen's army rejoices, with the Hatter doing a Fudderwupping dance, much to the delight of everyone. The White Queen then collects some of the Jabberwocky's blood, and gives it to Alice. The blood of the Jabberwocky allows Alice to return to her world, and she returns to the Garden Party.
Alice then explains to Hamish that she cannot accept his proposal, as well as speaks her mind to a number of different relatives and acquaintances. Her forthright attitude catches the eye of Hamish's father, and soon, the two discuss plans to expand the shipping routes to China, a land that has not yet been opened to the west.
Alice is then made an apprentice to the company, and sets off with a crew to open the shipping route to China, aboard a ship titled "Wonder". The last thing shown is a bright blue butterfly, none other than Abosolom.