The story begins in Tuscany, Italy. A carpenter Master Antonio, but whom everyone calls Master Cherry for his bright shiny red nose, has found a block of pinewood which he plans to carve into a leg for his table. When he begins, however, the log shouts out, "Don't strike me too hard!"
Frightened by the talking log, Master Cherry does not know what to do until his neighbor Geppetto, known for disliking children who call him "Polendina", drops by looking for a piece of wood to build a marionette; seeing a perfect opportunity, Antonio gives the block to Geppetto. As Geppetto carves the puppet, the nose begins to grow. Geppetto is extremely poor and plans to make a living as a puppeteer in hopes of earning some food to eat. He carves the block into a boy and names him Pinocchio.
As soon as Pinocchio's nose has been carved, it begins to grow with his congenital impudence. Before he is even built, Pinocchio already has a mischievous attitude; no sooner than Geppetto is finished carving Pinocchio's feet does the puppet proceed to kick him. Once the puppet has been finished and Geppetto teaches him to walk, Pinocchio runs out the door and away into the town.
He is caught by a Carabiniere, but when people say that Geppetto dislikes children, the carabineer assumes that Pinocchio has been treated poorly and imprisons Geppetto.
Left alone, Pinocchio heads back to Geppetto's house to get something to eat. Once he arrives at home, the Talking Cricket who has lived in the house for over a century tells him that boys who do not obey their parents grow up to be donkeys. In retaliation, Pinocchio throws a hammer at the cricket, more accurately than he intended to, and accidentally kills it.
Unable to find food in the house, Pinocchio ventures to a neighbor's house to beg for food. The neighbor is annoyed by Pinocchio's pleas because it is late at night and he tells him to "come underneath and hold out your cap". He then proceeds to pour an enormous basin of water on him. Pinocchio returns home freezing and tries to warm himself by placing his feet upon the stove. The next morning he wakes to find that his feet have burnt off. His father, who has been released from jail and has with him three pears for a meal, makes his son a new pair of feet.
Since Pinocchio says he is starving, Geppetto gives him the pears and teaches Pinocchio to waste nothing. In gratitude, Pinocchio promises to go to school. Since Geppetto has no money to buy school books, he sells his only coat. Pinocchio heads off to school, but on the way he hears music and crowds. Curious, he follows the sounds until he finds himself in a crowd of people, all congregated to see the Great Marionette Theater.
Unable to withstand the urge, he sells his school book for tickets to the show. During the performance, the puppets Harlequin, Punch, and Signora Rosaura (who are on stage) see Pinocchio and stop acting, crying out, "It is our brother Pinocchio!" While the puppets rejoice, however, the audience grows angry, and the theater director, Mangiafuoco, comes out to see what is going on.
Upset, he breaks up the excitement and decides to use Pinocchio as firewood to cook his lamb dinner. After Pinocchio pleads to be saved, Mangiafuoco gives in and decides to burn Harlequin. After Pinocchio pleads for Harlequin's salvation, Mangiafuoco gives up. When he learns about Pinocchio's poor father, he gives the marionette five gold pieces for Geppetto.
As Pinocchio heads home to give the coins to his father, he meets a fox and a cat on the side of the road. They tell him that if he plants his coins in the Field of Miracles, outside the city of Catchfools, then they will grow into a tree with a thousand gold coins. Believing them, Pinocchio heads off on a journey to Catchfools with the Cat and Fox. On the way, they stop at the Inn of the Red Crayfish, where the Fox and Cat gorge themselves on food at Pinocchio's expense.
During the night, the innkeeper wakes Pinocchio, saying that the Fox and Cat have left on an emergency, but will meet Pinocchio in Catchfools. As Pinocchio sets off for Catchfools, the ghost of the Talking Cricket appears, telling him to go home and give the coins to his father. Pinocchio ignores him again, however, and sets off for Catchfools.
As he passes through a forest, the Fox and Cat, disguised as bandits, jump out and try to rob Pinocchio. The marionette hides the coins in his mouth and runs up a tree, but the bandits kindle a fire underneath it. Pinocchio jumps down and they try to pry his mouth open, but he bites the Cat's hand off and escapes deeper into the forest. As Pinocchio runs through the forest, he sees a white house ahead.
Stopping to knock on the door, he is greeted by a young Fairy with Turquoise Hair. However, as he speaks to her, the bandits catch him and hang him in a tree. After a while the Fox and Cat get tired of waiting for the marionette to suffocate and leave.
The blue-haired fairy sends a falcon and a poodle to rescue Pinocchio, and she calls in three famous doctors to tell her if Pinocchio is dead. The first two (an owl and a crow) are uncertain, but the third—the Talking Cricket that Pinocchio presumably killed earlier — knows that Pinocchio is fine and tells the marionette that he has been disobedient and hurt his father.
The Blue-haired Fairy asks Pinocchio where the gold coins are. Pinocchio lies, saying he has lost them. As he tells this lie (and more) his nose begins to grow until it is so long he cannot turn around in the room. The Fairy explains to Pinocchio that it is his lies that are making his nose grow long, then calls in a flock of woodpeckers to chisel down his nose.
Pinocchio and the Blue-haired Fairy decide to become brother and sister, and the Fairy sends for Geppetto to come live with them in the forest. Pinocchio heads out to meet his father, but on the way he meets the fox and cat again (whom he had not recognized as the bandits, even though he has a hint from the cat's bandaged front paw—which he had bitten earlier; the fox tells him the cat had shown mistaken kindness to a wolf).
They remind Pinocchio of the Field of Miracles, and finally he agrees to go with them and plant his gold. After half a day's journey, they reach the city of Catchfools. Everyone in the town has done something exceedingly foolish and now suffers as a result. When they reach the "Field of Miracles", Pinocchio buries his gold then runs off to wait the twenty minutes it will take for his gold to grow.
After twenty minutes he returns, only to find no tree and—even worse—no gold coins. Realizing what has happened, he goes to Catchfools and tells the judge about the fox and cat. The judge (as is the custom in Catchfools) sends Pinocchio to prison for his foolishness.
While in prison, however, the emperor of Catchfools declares a celebration, and all prisoners are set free. As Pinocchio heads back to the forest, he finds an enormous serpent with a smoking tail blocking the way. After some confusion, he asks the serpent to move, but the serpent remains completely still.
Concluding that it is dead, Pinocchio begins to step over it, but the serpent suddenly rises up and hisses at the marionette, toppling him over onto his head. Struck by Pinocchio's fright and comical position, the snake laughs so hard, it bursts an artery and dies.
While sneaking into a farmer's yard to take some grapes, Pinocchio is caught in a weasel trap. When the farmer comes out and finds Pinocchio, he ties him up in a doghouse to guard his chicken coop. That night, a group of weasels come and tell Pinocchio that they had made a deal with former watchdog Melampo to let them raid the chicken coop if he could have a chicken. Pinocchio says he wants two chickens, so the weasels agree and go into the henhouse. Pinocchio then locks the door and barks loudly.
The farmer gets the weasels and frees Pinocchio as a reward. Pinocchio comes to where the cottage was and finds nothing but a gravestone. Believing the Blue-haired Fairy died from sorrow, he weeps until a friendly pigeon offers to give him a ride to the seashore, where Geppetto is building a boat to go out and search for Pinocchio. They fly to the seashore and Pinocchio sees Geppetto out in a boat.
The puppet leaps into the water and tries to swim to Geppetto, but the waves are too rough and Pinocchio is washed underwater as Geppetto is swallowed by a terrible shark.
A kindly dolphin gives Pinocchio a ride to the nearest island, which is the Island of Busy Bees. Everyone is working and no one will give Pinocchio any food as long as he will not help them. He finally offers to carry a lady's jug home in return for food and water.
When they get to the house, Pinocchio recognizes the lady as the Blue-haired Fairy, now miraculously old enough to be his mother. She says she will act as Pinocchio's mother and Pinocchio will begin going to school. She hints that if Pinocchio does well in school he will become a real boy.
Pinocchio starts school the next day and after showing his determination becomes a friend to all the schoolboys. A while later a group of boys trick Pinocchio into playing hookey by saying they saw a large whale at the beach. Hoping that it is the shark that swallowed Geppetto, he accompanies them to the beach only to find he has been fooled.
He begins fighting with the boys and one boy grabs a schoolbook of Pinocchio's and throws it at him. The marionette ducks and the book hits another boy named Eugene, who is knocked out. The other boys flee while Pinocchio tries to revive Eugene. Then two policemen come up and accuse Pinocchio of injuring Eugene. Before he can explain, the policemen grab him to take him to jail — but he escapes and is chased into the sea by the police dog. The dog starts to drown and Pinocchio saves him. The dog is grateful and promises to be Pinocchio's friend. Pinocchio happily starts swimming to shore.
Then The Green Fisherman catches Pinocchio in his net and starts to eat the fish, saying Pinocchio must be a very special fish. Taking off the marionette's clothes and covering him with flour, the ogre prepares to eat Pinocchio. The police dog then comes in and rescues Pinocchio from the ogre. On the way home, Pinocchio stops at a man's house and asks about Eugene. The man says Eugene is fine, but that Pinocchio must be a truant. Pinocchio says that he is always truthful and obedient. Again his nose grows longer and Pinocchio immediately tells the truth about himself, causing the nose to shrink back to normal.
Pinocchio gets home in the middle of the night. He knocks on the door and a snail opens the third-story window. Pinocchio pleads to be let in and the snail says he will come down. Since a snail is slow, it takes all night for the snail to come down and let Pinocchio in. By the time the snail comes down Pinocchio has banged his foot against the door and gotten stuck. The snail brings Pinocchio artificial food and the marionette faints. When he wakes, he is on the couch and the Fairy says she will give him another chance.
Pinocchio does excellently in school and passes with high honors. The Fairy promises that Pinocchio will be a real boy next day and says he should invite all his friends to a party. He goes to invite everyone, but he is sidetracked when he meets a boy named Romeo—nicknamed Lampwick because he is so tall and skinny. Lampwick is about to go to a place called Toyland, where everyone plays all day and never works.
Pinocchio goes along with him and they have a wonderful time in the land of Play—until one morning Pinocchio awakes with donkey ears. A Squirrel tells him that boys who do nothing but play and never work always grow into donkeys. Within a short while Pinocchio has become a donkey. He is sold to a circus and is trained to do all kinds of tricks.
Then one night in the circus he falls and sprains his leg. The circus owner sells the donkey to a man who wants to skin him and make a drum. The man throws the donkey into the sea to drown him — and brings up a living wooden boy. Pinocchio explains that the fish ate all the donkey skin off of him and he is now a marionette again. Pinocchio dives back into the water and swims out to sea — when he is swallowed by The Terrible Shark.
Inside the shark Pinocchio meets a tuna who is resigned to the fate and just says they will have to wait to be digested. Pinocchio sees a light from far off and he follows the light. At the other end is Geppetto, who had been living on a ship that was also in the shark. Pinocchio and Geppetto and the tuna manage to get out from inside the shark and Pinocchio heroically attempts to swim with Geppetto to shore, which turns out to be too far; however, the tuna rescues them and brings them to shore. Pinocchio and Geppetto try to find a place to stay.
They pass two beggars, who are the fox and the cat. They plead for food or money, but Pinocchio will give them nothing. They arrive at a small house, and living there is the Talking Cricket, who says they can stay. Pinocchio gets a job doing work for a farmer, whose donkey is dying. Pinocchio recognizes the donkey as Lampwick. Pinocchio mourns over Lampwick's dead body and the farmer is perplexed as to why.
Pinocchio says that Lampwick was his friend and they went to school together, causing Farmer John to be even more confused. After long months of working for the farmer and supporting the ailing Geppetto he goes to town with what money he has saved (40 pennies to be exact) to buy himself a new suit. He meets the snail, who tells him that the Blue-haired Fairy is ill and needs money.
Pinocchio instantly gives the snail all the money he has, promising that he will help his mother as much as he is helping his father. That night, he dreams he is visited by the Fairy, who kisses him. When he wakes up, he is a real boy at last. Furthermore, Pinocchio finds that the Fairy left him a new suit and boots, and a bag which Pinocchio thinks is the forty pennies he originally loaned to the Blue Fairy. The boy is shocked to find instead forty freshly minted gold coins. He is also reunited with Geppetto, now healthy and resuming woodcarving.
- The place of the Talking Cricket is taken by Jiminy Cricket. This character is heavily influenced by the character of the same name from the Disney film Pinocchio. He is not killed by Pinocchio, and is tasked with looking after Geppetto because he felt guilty after accidentally killed and turn Geppetto's parents into puppet by the Marionette potion given by Rumplestiltskin.
- Pinocchio and Geppetto are chased by Monstro. They manage to jump overboard as Pinocchio makes his father take the only life preserver left. After the two are washed ashore, the Blue Fairy turns Pinocchio into a real boy and he would remain a real boy as long as he was brave, truthful and unselfish.
- Geppetto is asked by the Blue Fairy to carve an enchanted wardrobe that can protect two people from the Evil Queen's Dark Curse. Worried for his son's safety, Gepetto demands that Pinocchio be one of the two people saved from the curse, and only then he will make the wardrobe. She agrees, but breaks the deal when the other intended person to go through the wardrobe, Snow White, gives birth early. Since the curse can only be lifted in twenty-eight years time by the savior, Snow White's daughter Emma, both mother and child must go through the wardrobe. Ignoring the Blue Fairy, Gepetto sends his son to the other world to protect Emma. The two children are sent to a foster home, but Pinocchio abandons Emma.
- Twenty-eight years later, Emma's arrival to the town of Storybrooke triggers Pinocchio's reversion into wood. Pinocchio, under the alias August Booth, decides he must help Emma break the curse by believing in magic.
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