In 1931, Hugo Cabret, a 12-year-old boy, lives with his widowed father, a kind and devoted master clockmaker in Paris. Hugo's father takes him to see films and loves the films of Georges Méliès best of all. Hugo's father is burned alive in a museum fire, and Hugo is taken away by his uncle, an alcoholic watchmaker who is responsible for maintaining the clocks in the railway station Gare du Nord. His uncle teaches him to take care of the clocks, then disappears.
Hugo lives between the walls of the station, maintaining the clocks, stealing food and working on his father's most ambitious project: repairing a broken automaton – a mechanical man who is supposed to write with a pen. Convinced that the automaton contains a message from his father, Hugo goes to desperate lengths to fix it. Hugo steals mechanical parts in the station to repair the automaton, but he is caught by a toy store owner named Georges Melies who takes Hugo's notebook from him, with notes and drawings for fixing the automaton.
To recover the notebook, Hugo follows Melies to his house and meets Isabelle, a girl close to his age and Georges's goddaughter. She convinces him to go home and promises to help. The next day, Melies gives some ashes to Hugo, referring to them as the notebook's remains, but Isabelle informs him that the notebook was not burnt. Finally Melies agrees that Hugo may earn the notebook back by working for him until he pays for all the things he stole from the shop.
Hugo works in the toy shop, and in his time off manages to fix the automaton, but it is still missing one part – a heart–shaped key.
Hugo introduces Isabelle to the movies, which her godfather has never let her see (they sneak in a silent movie projection without buying a ticket), while she introduces Hugo to a bookstore where its owner first mistrusts Hugo. At first, Hugo is not trusting of Isabelle and tries to leave her, but Isabelle turns out to have the key to the automaton when she tries to find Hugo and gets trapped in the process. When they use the key to activate the automaton, it produces a drawing of a film scene. Hugo remembers it is the film his father always talked about as the first film he ever saw (Voyage to the Moon). They discover that the drawing made by the automaton is signed with the name of Isabelle's godfather and take it to her home for an explanation.
In the Melies home Hugo shows Georges's wife Jeanne the drawing made by the automaton, but she will not tell them anything and makes them hide in a room when Georges comes home. While hiding from him, Isabelle and Hugo finds a secret cabinet and accidentally release pictures and screen boards of Georges' creations just as Georges and Jeanne enter the room. Georges feels depressed and betrayed.
However, Hugo gets the book store owner's friendship and he helps Hugo and Isabelle search a for a book on the history of film. They find the book and are surprised that the author, Rene Tabard, refers to Georges Melies as having died in the Great War (World War I). When they try to understand the reason for this error, Monsieur Tabard himself appears and the children tell him that Melies is alive. Tabard reveals himself as a devotee of Melies's films who still owns a copy of "Voyage to the Moon".
Hugo, Isabelle and Tabard go to Georges's home, and at first Jeanne does not welcome them, telling them to go before her husband wakes. However Jeanne accepts their offer to show "Voyage to the Moon" when it is revealed that she was one of the actresses in Georges's films. While they are watching the film, Georges appears and explains how he came to make movies, invented the special effects, and how he lost faith in films when the World War I began, being forced to sell his films in order to get money, and getting the toy shop in order to survive. He also believes the automaton he created was lost in the museum fire, and that there is nothing left of his life's work.
Hugo decides to go back to the station to get the automaton, but on arrival he is cornered by the station inspector and his dog. He escapes and runs to the top of the clock tower and hides by climbing out onto the hands of the clock. Once the inspector is gone he grabs the automaton and runs for the exit with it, but he is trapped by the inspector and the automaton is thrown to the railway tracks. Hugo tries to save it but there is a train coming. Climbing onto the tracks anyway, he is almost run over when the officer saves him and the automaton and proceeds to detain him. Hugo pleads with the officer, but then Georges arrives and claims that Hugo is in his care.
Finally Georges gets a tribute ceremony to his movies, Tabard announcing that some 80 films of his have been recovered and restored. Georges thanks Hugo for his actions, and then invites the audience to "follow his dreams". Hugo becomes an apprentice of Georges and Isabelle decides to be a writer.