Lemuel Gulliver (Jack Black) is the boss of newcomer Dan (T. J. Miller) in the mail room of a New York City newspaper, but soon, Dan is promoted to a boss. Deeply depressed at his dead-end job, Gulliver decides to talk to journalist Darcy Silverman (Amanda Peet). He convinces her he could write a report about his (false) extensive world "travels" saying his dream is to become a writer. After suffering writer's block and thinking that Darcy will not want to hang out with a "guy from the mailroom", he plagiarises a report from other publications on the Internet. The next day, Darcy, impressed by his writing, presents Gulliver with a new task – to travel to the Bermuda Triangle and write an article confirming that the legend of ships mysteriously disappearing in the area being caused by extraterrestrials is not true.
Upon arrival in Bermuda, Gulliver rents a boat and travels into the triangle. After falling asleep at the helm of his ship, he's caught in a freak storm and the boat is overwhelmed by a waterspout. He washes up unconscious on the shore of Lilliput, where he is immediately confirmed as a "beast" by the town's tiny people. He is captured and imprisoned in a cave, citizens claiming him to be dangerous because of his huge size. Here, he meets another prisoner named Horatio (Jason Segel) who was jailed by General Edward (Chris O'Dowd) because he likes Princess Mary of Lilliput (Emily Blunt), whereas Edward wants her for himself. After the island across from Lilliput, Blefuscu, infiltrates commandos to kidnap Princess Mary, Gulliver manages to break free of the plough-machine he is forced to work and then rescues the princess from being kidnapped. Gulliver also saves her father, King Benjamin (Billy Connolly) from a fire by urinating on it.
Gulliver is declared a hero by Lilliput's citizens and makes up a deal of lies saying he is the President of the United States, says Yoda is his Vice-President and a living legend in his homeland. Edward, however, becomes enraged due to the luxurious accommodations that have been built for him, and even being presented as an honorary general of the Lilliputian Army complete with uniform. When the townspeople find Gulliver's boat and his things, Gulliver gets angry voice mail messages from Darcy, angrily saying she has to take his place and travel to Bermuda now, and also found out about his plagiarism and she no longer wishes to be friends with him. The next day, chaos ensues as the Blefuscian Navy lay siege on the city when Edward shuts down its defense system as an act of revenge for Gulliver's treatment. Gulliver defeats the armada, invulnerable to the cannonballs being fired at him (although he receives numerous welts on his stomach). Embarrassed once more, and with Mary no longer wanting to do anything with him, Edward defects to the Blefuscians and brings with him blueprints of a robot coming from one of Gulliver's sci-fi magazines. The Blefuscians secretly build the robot based on Gulliver's magazine, with Edward as the pilot.
The Blefuscians invade Liliput and the robot-wielding Edward makes Gulliver admit to the people that he is "just the guy from the mail-room" and nothing more. Edward banishes Gulliver on the shores of Brobdingnag ("the island where we dare not go"), where he is captured by Glumdalclitch, a giant girl who is to Gulliver as Gulliver is to the people of Lilliput, and forced to become her doll complete with wig and dress. Darcy is then imprisoned by the Blefuscians when she is lost in the Bermuda Triangle in the same manner as Gulliver. Horatio, who has gone to Brobdingnag after being spurned by Mary, reveals to Gulliver that Darcy is imprisoned. Gulliver narrowly escapes with him, using a parachute that he took from a dead U.S. Air Force pilot sitting in the dollhouse (a crashed F-104 Starfighter is seen in the girl's yard).
Once again accepting a duel from Edward, this time not only for Lilliput's freedom but for its fate as well -as Edward threatens to destroy it should Gulliver fail- Gulliver ultimately defeats him with the assistance of Horatio, who disables the machine's electrocuting weapon. Horatio is hailed a hero and gets King Benjamin's permission to court the princess. Edward, reaching the point of insanity, threatens to kill the princess, but the princess, finally having enough of Edward, knocks the traitor down in frustration. Gulliver then helps to make peace between the rival island-nations by reciting Edwin Starr's "War" and he, along with Darcy, return to New York on their repaired boat. The film ends with Darcy and Gulliver holding hands walking away from the screen.