In 1607, the Susan Constant sails from London to the New World, carrying English settlers from the Virginia Company. Along the way, the Susan Constant is caught in a North Atlantic storm and Captain John Smith, who dreams about adventure, saves Thomas, a young and inexperienced crewmate, from drowning. As they approach the New World, the settlers, including John, talk of adventure, finding gold, fighting "Injuns" and potentially settling in the new land.
In the Powhatan tribe in Tsenacommacah, Virginia, Pocahontas, the beautiful daughter of Chief Powhatan, fears being possibly wed to Kocoum, a brave warrior whom she sees as too serious for her own free-spirited personality. Powhatan gives Pocahontas her mother's necklace as a present. Pocahontas, along with her friends, the raccoon Meeko and hummingbird Flit, visit Grandmother Willow, a spiritual talking willow tree, and speaks of a dream involving a spinning arrow and her confusion regarding what her path in life should be. Grandmother Willow then alerts Pocahontas to the arriving English.
The voyage's greedy leader Governor Ratcliffe, who seeks gold as part of his plan to bring him wealth and status, has Jamestown built in a wooded clearing and immediately has the crewmen dig for gold. John departs to explore the wilderness and encounters Pocahontas. They quickly bond, fascinated by each other's worlds, and end up falling in love, despite Powhatan's orders to stay away from the Englishmen after Kocoum and the other warriors engage them in a fight. Meanwhile, Meeko meets Percy, Ratcliffe's pet pug, and becomes the bane of his existence. When John tells Pocahontas that his men and he are here to find gold, she tells him that there is none. Pocahontas introduces John to Grandmother Willow and avoids other crewmen searching for him, but Pocahontas's best friend, Nakoma, discovers her relationship with John and warns Kocoum. Ratcliffe also learns of John's encounters with Pocahontas and angrily warns John against sparing any natives he comes across as treason.
Later, John and Pocahontas meet with Grandmother Willow and plan to bring peace between the colonists and the tribe. John and Pocahontas share a kiss, while Kocoum and Thomas, sent by both parties to spy on each other, witness from afar. Furious, Kocoum attacks and attempts to kill John, but Thomas intervenes shooting and killing Kocoum, who pulls on Pocahontas's necklace as he collapses, destroying it. John orders Thomas to leave before the tribesmen arrive, capture John, and retrieve Kocoum's body. Enraged at Kocoum's death, Powhatan declares war on the English, beginning with John's execution at sunrise.
Thomas reaches Jamestown safely at night and warns the English settlers of John's capture. Ratcliffe then rallies his men to battle, using this as an excuse to annihilate the tribe and find their nonexistent gold. That same night, Powhatan also orders his men to prepare for battle. A desperate Pocahontas visits Grandmother Willow, where Meeko hands her John's compass. Pocahontas realizes the arrow from John's compass is the same spinning arrow from her dream, which leads to her destiny. Morning comes, and Powhatan and his tribe drag John to a cliff overlooking a clearing for execution. Meanwhile, Ratcliffe leads the armed colonists to the cliff to fight Powhatan's warriors. Just as Powhatan is about to execute John, Pocahontas intervenes and finally convinces him to end the fighting between the two groups and spare John's life. Both sides stand down, and John is released, but when the unmoved Ratcliffe orders his men to attack, they refuse. Enraged, Ratcliffe fires his musket at Powhatan, but John takes the shot himself and is injured. Livid, the settlers turn on Ratcliffe and detain him for hurting their comrade.
John is nursed back to health by the tribe but must return to England for his wounds to fully heal. Ratcliffe is also sent back to England to face punishment for his crimes against the settlement. John asks Pocahontas to come with him, but she chooses to stay with her tribe to help keep the peace. Meeko and Percy, now friends, give Pocahontas her mother's necklace completely fixed. John leaves without Pocahontas, but with Powhatan's blessing to return anytime he likes. The film ends with Pocahontas standing atop a cliff, watching the ship carrying John depart.