Omri (Hal Scardino), a young boy growing up in Brooklyn, receives an odd variety of presents for his birthday: a wooden cabinet from his older brother, a set of antique keys from his mother Jane (Linsday Crouse), and a tiny plastic model of an Indian from his best friend Patrick (Rishi Bhat). Putting them all together, Omri locks the Indian inside the cabinet, only to be awoken by a strange sound in the middle of the night. Omri opens the cabinet to discover that the tiny Indian has come to life; it seems that he's called Little Bear (Litefoot), and he claims to have learned English from settlers in 1761. Omri hides this remarkable discovery from his mother but shares it with Patrick; as an experiment, Patrick locks a toy cowboy into the cupboard, and soon Little Bear has a companion, Boone (David Keith), though predictably, the cowboy and the Indian don't get along well at first. Omri comes to the realizations that his living and breathing playthings are also people with lives of their own, and he begins to wonder how much control he should really have over their lives.