Jack Frost emerges from a frozen pond with amnesia and enjoys his new abilities. Also, he discovers that no one can see or hear him. Three centuries later, Nicholas St. North, the Santa Claus, receives a warning from the Man in the Moon about Pitch Black, the evil spirit that causes nightmares in kids. Santa summons the guardians, the Tooth Fairy, who collects kids' fallen teeth; the Sandman, who brings hope through kids’ dreams; and Easter Bunnymund, who carries easter eggs for kids and informs them of the situation about Pitch Black and that Jack has been selected to become a new Guardian by the Man in the Moon.
Jack plays with kids without being visible to any of them. On the other end, Pitch injects fear into the adorable dreams of kids and turns them into nightmares. When Santa sends Bunny to take Jack to the North Pole, Bunny takes Jack to Santa. Santa tells Jack that he is now the new guardian and that he was chosen by the Man on the Moon. He also tells Jack that each Guardian is a guardian of a certain center and asks him to find his center.
When the Guardians visit Tooth's palace, they discover that every baby tooth—including the tooth that contains the early memories of the kids—was stolen by Pitch. Pitch Black confronts them and says he does all this to make the kids believe him. The Tooth Fairy explains that teeth are collected to regain kids’ memories when required. She also explains that Jack’s tooth has also been collected, and unfortunately, it is now with Pitch. The children's faith in the Tooth Fairy is weakened as a result, and she cannot share Jack's recollections. Instead of fairies to foil Pitch's scheme, the group chooses to gather kids' teeth as a competition between each other.
When the fairy mentions the gift to be left, the guardians go again to each kid's house and leave a present. Jamie is one of the kids they see, and he wakes up. With Jack's exception, he sees everyone because he still believes. Unfortunately, to escape from the kid’s dog, Sandman accidentally makes everyone sleep except Jack, and they both follow Pitch Black, who visited there. Meanwhile, the kid’s sister Sophie gets into the bunny’s world using a snowball. After attacking kids with his nightmares, Pitch overpowers Sandy and kills him. Jack was able to save the guardians, but not Sandman.
As an indication of kids losing hope in guardians, flickering lights go off around the globe. To prevent Pitch from ruining Easter, the Guardians go to Bunny's house next as Easter draws near and paint eggs. They all find an intruder, Sophie, and start painting eggs with her. After leaving Sophie at her home, Pitch entices Jack to visit his lair. To regain his memory, Jack searches for his lost tooth. When he discovers his teeth there, he becomes preoccupied, which allows the nightmares to disrupt Easter and make kids lose faith in the Easter Bunny.
After losing the Guardians' faith in him, Jack runs away to Antarctica. There, he fights Pitch, who smashes Jack's magic staff and drops him into a crevasse. He regains his memories from the tooth, where Jack discovers that he was a human teenager who drowned while attempting to save his younger sister by opening the memories locked between his teeth. And he realizes that’s how he was chosen to be a guardian by Moon Man. Motivated, he fixes his staff, finds the missing fairies, and releases them, but none of them can fly.
The pitch has caused all children worldwide to lose faith, except for Jamie, which severely undermines the Guardians. When Jack notices that Jamie's faith is waning, he creates snow in his chamber, inspiring Jamie to trust in Jack once more and become the first to do so. When all the guardians almost lose their powers completely, Jack discovers that his center is ‘Fun’ and uses it to play with Jamie's pals. This inspires newfound faith in them, which strengthens their resistance to Pitch and brings Sandy back to life. The nightmares are defeated by the children's dreams, as they activate Pitch and take him down to the underworld. At last, Jack comes to terms with his role as the Guardian of Fun.
