Jack Frost, narrating, describes how he came to be, hundreds of years ago. In the present, he creates a snow day for a small town's children. At the North Pole, Santa Claus a.k.a. North is alerted that Pitch Black, the Bogeyman, has returned and is threatening childhood with fear. After summoning his fellow Guardians, the Tooth Fairy (Tooth), the Easter Bunny (E. Aster Bunnymund) and the Sandman, North learns from Man in the Moon that they are to induct Jack Frost as their newest member. The Easter Bunny, although reluctant to include this mischievous trickster, dutifully brings Jack to North's headquarters and they attempt to swear him in. Jack, frustrated by centuries of isolation caused by disbelief in him, declines to join. Regardless, North persuades him to cooperate for now by explaining their mission and the looming threat of Pitch.

When the team travels to Tooth's lair, they find it being raided by Pitch's minions, who have taken all the children's teeth, and the childhood memories stored in them, and all but one of Tooth's assistants. Pitch declares his intention to destroy children's faith in the Guardians in revenge for his own unbelieved state, beginning with Tooth. To avert this, the Guardians perform her teeth-collection themselves for the interim, with a promise to find Jack's teeth to recover his previous life's memories.

While the collection proves successful, they are discovered by a young boy, Jamie, in his room, although Jack is still invisible. Pitch learns of the Guardians' resistance and moves to stop them. To do so, Pitch attacks Jack and the Sandman when they are alone, and despite Jack's efforts to support his comrade, the Sandman is overwhelmed and seemingly destroyed.

The dejected Guardians rally by helping Bunnymund prepare his eggs for Easter. Although slightly complicated by the intrusion of Jamie's toddler sister, Sophie, in Bunnymund's domain, the operation goes smoothly through to the distribution stage. At this point, Jack volunteers to take Sophie home, and soon discovers the entrance to Pitch's headquarters, where Tooth's minions and the teeth are being held. Pitch discovers him and urges him to step aside as a neutral party with the promise of his teeth's memories. Jack will not, and Pitch's machinations then ruin the Easter-egg distribution, shattering children's faith in the Easter Bunny.

The Guardians' team spirit broken, a despondent Jack departs in disgrace to Antarctica. There, Pitch finds him and tempts him to join forces in an alliance of cold and fear, but Jack refuses. In response, Pitch reveals he has Tooth's last free assistant, Baby-tooth, and threatens to kill her unless Jack relinquishes the source of his power, his staff. Jack submits, but Pitch reneges and the resulting fight leaves Jack trapped in a crevasse with Baby-tooth while Pitch breaks his staff. To counter Jack's despair, Baby-tooth unlocks Jack's memories, which reveal he was a mortal boy who died saving his sister, and was changed into a winter spirit by the Man in the Moon.

At this revelation, Jack is able to restore his staff and his power and return to North's besieged workshop, where the Guardians and Pitch learn there is only one believing child left in the world: Jamie. Jack races to the boy and not only confirms Jamie's faith in the Guardians, but also instills a belief in Jack Frost, enabling Jamie to see him. The diminished Guardians arrive to join him as they confront Pitch, while Jamie gathers his friends to support them. Pitch's seemingly overwhelming power of nightmare proves no match against the children's faith, which restores the Guardians' full power to battle the villain. Eventually, Sandman is resurrected and joins the fight leaving Pitch defeated and children's faith restored.

At this victory, Jack is finally sworn in as a Guardian and resolves to guard the world's children with his new friends.