Hugo is a 12 year old homeless boy who playfully bothers the adults who work at the train station where he lives. He's an orphan, escaped from an alcoholic uncle. He works on his automaton (a little mysterious machine) and avoids the Station Inspector who treats Hugo cruelly.
One day, Georges Méliès, the toy kiosk owner, ends up involved with Hugo when his goddaughter Isabelle tries to help Hugo, to the toy shop owner's chagrin. He agrees to help Hugo with his automaton, but the boy must work part time in the kiosk. Hugo likes the job and he likes Isabelle and her friend Etienne. One day, the Méliès accuses Hugo of stealing back his notebook, but it wasn't him; it was Isabelle, plagued by her curiosity.
When Hugo takes the fall, he gets a chance to hug Isabelle goodbye, but instead, he sees a key on her necklace and has a startling realization: he snatches the necklace and runs back to his automaton, and she runs after him, but she can't catch him before he can try the key in the automaton.
Suddenly the little robot draws him a picture, a still from A Trip to the Moon, a favorite film of Hugo's late father. When the drawing is over, the automaton draws its signature—Georges Méliès. Upon further snooping, they discover that he is really a famous filmmaker who everyone thinks is dead. Hugo and his friends arrange a visit between Georges and Rene Tabard, Etienne's teacher who is a huge fan of Georges's films. They burst in, and Georges tells them about his past.
Hugo goes to bring Georges the automaton from the station, but Hugo learns of his uncle's death, spilling milk he was attempting to steal. The Station Inspector chases him, but Georges appears in a magicians cape to save him. In the denouement, we learn that Méliès invites Hugo to live with him, and they watch movies together every day.
