In 1931, Hugo Cabret (Asa Butterfield) is a 12-year-old boy living in the walls of the Paris Gare Montparnasse railway station, where he mends the station's clocks. Previously, he was raised by his widowed father, a museum worker (Jude Law). His father had doted on Hugo, teaching him the art of repairing mechanical devices, taking him to movies, and showing him how he was repairing an automaton (mechanical man) that supposedly could write a message. After his father was killed in a museum fire Hugo was taken in by his alcoholic uncle Claude (Ray Winstone) who showed little sentiment for Hugo but taught the boy how to maintain the clocks at the station. When Claude disappears, Hugo continues to maintain the clocks while eking out a living by stealing food and supplies. All the while Hugo lives in fear that if the vigilant Station Inspector (Sacha Baron Cohen) were to discover him, he would be turned over to an orphanage.
Hugo continues the work on the automaton. Relying on his father's notebook for insight, he steals the required parts wherever he can, including from the shop of a toymaker who makes and sells mechanical toys. One day, he is finally caught by the bitter toymaker, Papa Georges (Ben Kingsley), who has long known that Hugo robs him. Georges looks through Hugo's father's notebook, is evidently strongly affected by it, and keeps it despite Hugo's protests. Hugo trails Georges to his home to retrieve it. There, he meets Georges' goddaughter, Isabelle (Chloë Grace Moretz), who promises to help.
At the station on the following day Georges gives some ashes to Hugo, referring to them as the remains of the notebook. Later, Isabelle tells him that the notebook was not burnt, adding that the notebook has somehow deeply disturbed her Papa Georges. Finally, Georges tells Hugo that he may earn his notebook back if he works in the toy store every day to pay for all the items Hugo stole. During his free time, Hugo continues to work on the automaton. When it is finished, however, it is still missing one part: a heart-shaped key that goes into the back of the automaton to make it work.
As the two grow close together, Hugo takes Isabelle to the movies, something that Georges would never let her do, while she introduces him to a bookstore owner (Christopher Lee) who has loaned her books in the past.
Hugo is surprised to find that Isabelle wears a heart-shaped key as a necklace. He asks to borrow it, but Isabelle refuses to lend the key to him unless he tells her why he needs it. At first he declines, but his desire to see the automaton operate leads him to take Isabelle to see the automaton. They use the key to start the automaton, and watch as it draws out an iconic image from the film Voyage to the Moon by the film pioneer Georges Méliès. When the automaton writes a signature beneath the drawing, Isabelle recognizes the name as her godfather's own. They take the drawing to Georges' home for an explanation. They ask Isabelle's godmother Mama Jeanne (Helen McCrory) but she will not tell them anything. As Georges arrives home, Jeanne forces the children into a back room, where they find a hidden compartment in an armoire. In the compartment is a small chest containing a copy of the automaton's drawing, along with many other drawings. The noise of a collapsing chair draws Georges into the room, and he throws Hugo out, feeling betrayed.
Some time later, Hugo and Isabelle discuss Méliès with the bookstore owner; he directs them to the Film Academy section of the library, telling them just where they may find a book on the history of film. As they read the book, its author, Rene Tabard (Michael Stuhlbarg), appears and describes his love for Méliès's work. The book asserts that Méliès died during World War I, but the children convince Tabard that the filmmaker is still alive. Tabard reveals he has the last known copy of Voyage, and he suggests that they go to the Georges' house to watch it the next evening. That night, Hugo had a dream where he finds a golden heart-shaped key lying on a railbed in the station but is run over by an approaching train and his dream ends with images of the Gare Montparnasse accident of 1895.
The next evening, Jeanne is hesitant about letting them show the film until Tabard recognizes her as Jeanne d'Alcy, a frequent and beautiful actress in many of Méliès' films. When the film finishes, Georges comes out, and emotionally reveals himself to be Méliès, recalling his filmmaking career. He transformed his illusionist skills into the special effects he used for his movies to bring his vivid imagination to life. However, after the horrors of World War I, his films lost popularity with the jaded and disillusioned population, and he became ruined, selling the films to be melted down to chemicals, used to mold shoe heels, and quietly disappeared as a toy maker to sustain himself and Jeanne. Georges is despondent, believing all of his former film materials were otherwise destroyed in a museum fire, leading Hugo to recall the automaton.
Hugo races back to the station to get the automaton (intending to use it as a surprise for Georges), but before he can retrieve it, he is discovered by the Station Inspector who reveals that Claude's body had been discovered in the River Seine. The Inspector now knows Hugo is an orphan. During the ensuing chase, Hugo climbs up the clock tower and is forced to climb onto the clock hands to hide from the Inspector. When he goes away, Hugo quickly climbs back in and gets the automaton but is quickly cornered again by the Inspector and the automaton is thrown onto the railway tracks. Despite the approach of an oncoming train, Hugo jumps onto the tracks to recover the automaton. With no time to climb back up onto the platform to save himself and the automaton, Hugo appears to face certain death from the oncoming train. However, the Inspector saves Hugo at the last moment. As the Inspector decides whether or not to arrest Hugo, Georges arrives and asserts that Hugo is now in his care. Hugo presents the automaton to Georges.
Sometime later, a film festival is held showcasing over eighty recovered and restored Méliès films. Georges tearfully takes the stage, and thanks Hugo for his dedication and to the other attendees for sharing his imagination with him. After the festival, in the Georges' house, Hugo has acclimated as Georges' son, while Isabelle begins writing a book on the recent events. The film ends on a shot of the automaton sitting at a writing desk in a pleasant room, posed as though prepared to resume drawing.
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