The Way Way Back begins with four people in a car Trent (Steve Carell) driving, his girlfriend Pam (Toni Collette), a divorced Mom, sitting beside him. Trent's teenage daughter Steph (Zoe Levin) lies across the backseat listening to music; Pam's son Duncan (Liam James) sits in the rear-facing seat in the trunk of the car, known as the way way back, hence the title of the movie.
While Pam sleeps, Trent asks Duncan how he rates himself on a scale from 1-10. After some badgering by Trent, Duncan hesitantly replies a 6. Trent tells him he's a 3, and that he needs to put himself out there more.
They arrive at Trent's beach house, and see their neighbor, Betty (Allison Janney), who seems to be a little boozy and needy. She is divorced and has three children: an older son, who is seen later in the movie selling marijuana to some of the parents, a teenage daughter, Susanna (AnnaSophia Robb), and a younger son (with a lazy eye) named Peter.
They bring their things into the beach house with Betty following behind. Steph fetches her swimsuit to head to the beach. She comes downstairs, and Trent and Pam coerce Duncan to go down to the beach with her. Both kids don't want Duncan to go, but he goes to please his mother. He heads down to the beach, sitting a distance from Steph and her friends. Susanna is there with Steph, but she wants to read, while Steph and her whiney friends complain about things. Steph calls to her boyfriend Chad, complaining she wants to go in the water, and he doesn't seem to care. Steph takes off her clothes to get into her swimsuit. She sees Duncan just looking over to her, and she says, "Stop staring perv." Steph and her friends go into the water. They rudely tell Susanna to go in the water with them. Duncan then leaves.
On the way back to the beach house, Duncan runs into Betty and Peter, and Betty begins telling Duncan that he and Peter need to have a playdate. Duncan says he needs to ask his mom and walks away. Duncan comes home and later, comes downstairs to find Trent's party-hearty friends Joan (Amanda Peet) and Kip (Rob Corddry) chatting with Trent and Pam. They all eat dinner together, and Duncan remains quiet and seems to be miserable. The next day, Duncan finds a small girls' bike in the garage, and takes a ride into the town.
At the local pizzeria he sees Owen (Sam Rockwell) playing Pacman on an old machine. They talk for a bit until Owen has to leave because his lunch break is over.
Duncan comes back to the beach house and finds that they are going on Joan and Kip's boat. Duncan is forced to wear a life jacket (the only one required to do so), and Betty and Susanna tag along. They come back and later, Duncan goes outside and talks to Susanna about how it sucks here. She turns to go back indoors, and Duncan says, "It looks like it's going to be a hot summer" and she says, "I thought we were done here."
The next day, Duncan goes to the Water Wizz water park and sees Owen. Owen takes him around and takes him to get a rental bathing suit from Lewis (Jim Rash) and learns that Lewis doesn't like working there. They go up to the water slide and meet Roddy (Nat Faxon) who runs it. Owen calls him an artist because he makes girls hold and wait so he can look at their butts before they enter the water slides tube.
Later, Duncan and Owen run into Caitlin (Maya Rudolph) and she asks Owen if he did his work. As Duncan leaves for the day on his bike, Owen drives up to him and offers him a ride home. They get going after Duncan's bike is put into the rear seat of the car, and he drops off Duncan at the beach house. Owen asks Duncan if he wants a job at the water park, and Duncan accepts. When she sees Owen depart, Duncan's mother, Pam, asks him who that was, and Duncan tells her he's his friend. She replies "A friend with a license?"
The next day, Duncan reports for work at the water park. In his first scene at the water park, they see a group of people have taken cardboard and are break dancing on it. He is instructed by Owen to go over and to stop them. He turns off their music and attempts to pick up their cardboard. The guy dancing says that he can only take the cardboard if he shows them his moves. Duncan doesn't have any, but he tries some dance moves anyway. One girl from the crowd of onlookers shows up and teaches him some moves. They then flip him over and he spins on his head. He takes the cardboard, smiling brightly until he trips. Duncan is shown in a series of scenes, dancing with increasing levels of confidence. He then does what Roddy does at the top of the water slide, having the girls hold and wait so he can check them out.
Duncan meets three boys who have been trying to pass each other on the water slide forever. No one has done this before. The three boys rush into the water slides tube at once and end up getting stuck and need someone to push them down.
One rainy day he doesn't go to work. He stays at home and they all play the board game Candyland and end up getting into a huge fight over how strictly to apply the rules.
The next day Duncan finds Owen setting up the chairs, and Duncan continues to work on his tasks. On the fourth of July, Betty hosts a clambake at the beach. At the clambake, Duncan observes Trent making out with Joan in the shadows next to the house.
He returns to the table. We see Betty's oldest son passing out weed to the adults. Duncan walks on the beach with Susanna. They talk and watch the fireworks.
Next day Susanna sees Duncan leave on the bike on his way to work, and she follows him to the water park. She is surprised that he works at the water park, Duncan having kept it a secret. When they meet up, he shows her around the water park. While talking to her, they are eyed by Owen and Roddy, who call Duncan over using the loudspeaker. They ask Duncan who the young woman is and why he doesn't "seal the deal" with her.
He returns to Susanna, and Owen announces over the loud speaker "Duncan please return to your lady friend and let her know this conversation was entirely about her."
That night, Duncan arrives back at the beach house and he notices that Trent's car isn't there. Pam, Steph and Duncan wait for a while and then eat dinner without him. Trent returns later that night and says he was stuck on the boat with Kip.
The next day there is a party at a neighbor's house. Steph, Duncan and Susanna eat with the adults. Trent and Joan go out to dance. Pam overhears Kip telling Betty that the boat hasn't been working for a week, and needs help to fix it. Pam realizes that Trent's excuse was a lie, so she gets upset and walks away.
Duncan gets up from the table and says, "He's sleeping with her! And you know it!" They get into an argument, and it gets a little physical.
Later that night, Duncan sees Trent and Pam arguing. He goes down to the beach with Susanna. They talk about ghost crabs. He tries to kiss Susanna, but she leans back. Duncan is embarrassed and runs away from the beach.
He sees Peter, who demands that Duncan take him wherever he's going. They go to a going away party for Lewis at the water park. As Lewis starts to make a speech, Roddy, Caitlin and Duncan surprise him by spraying him with water from water guns. A general water gun fight ensues.
Duncan and Owen talk the next morning about Trent, and Duncan tells Owen about the time that he called him a 3. The next morning when Duncan arrives back at the beach house, he sees his mom packing, and he infers that he and his mother are leaving. But he is told they are all leaving together, which upsets him.
As they are packing the car, Susanna comes over to say goodbye and kisses Duncan, and tells him that she was just taken by surprise the night before. Duncan sees Steph looking on, and says "Stop staring, perv."
They get into the same seats in the car as at the beginning of the movie. They drive away and pass the water park. The song "Power Hungry Animals" plays. They stop at a gas station and Duncan hops out of the car and runs towards the water park. Pam and the others chase after him.
Inside the water park Pam sees a noticeboard with a sign that says "Employee of the Month" and the photo is of Duncan. Duncan tells Owen he is going to pass him on the water slide. The two rush up the stairs to water slide, dive inside the tube, and Duncan comes out before Owen does. Duncan becomes the first person to ever pass someone on the water slide.
We see that, despite his big plans for the future, Lewis is still working there.
Owen talks to Pam and Trent. He tells Pam that she's got a hell of a kid in Duncan. Owen says Hi to Trent, saying, "I'm a good friend of 'the 3'". Duncan tells Pam he needs a minute with Owen before they leave, and Duncan and Owen say an emotional goodbye. They then all get into Trent's station wagon again.
On the road all four passengers sit in silence, absorbed in their thoughts. After a few minutes Pam climbs over the seats and gets into the back with Duncan. They smile at each other. The movie closes.