The film was adapted by Aurelius Battaglia, William Cottrell, Otto Englander, Erdman Penner, Joseph Sabo, Ted Sears, and Webb Smith from Collodi's book. The production was supervised by Ben Sharpsteen and Hamilton Luske, and the film's sequences were directed by Norman Ferguson, T. Hee, Wilfred Jackson, Jack Kinney, and Bill Roberts.
On his first day of school Pinocchio is lead astray by the conniving Honest John and Gideon who convince him to join Stromboli's puppet show instead. Pinocchio becomes Stromboli's star attraction but Stromboli abuses Pinocchio by locking him in a bird cage. Stromboli also tells Pinocchio that "once you get old, I'll turn you into fire wood." The Blue Fairy appears and questions Pinocchio about his situation, Pinocchio lies about how he got into the situation but recants when his nose grows in size. With the help of the Blue Fairy and Jiminy, Pinocchio escapes from the cage after his nose is returned to normal.
Honest John and Gideon once more manage to lead Pinocchio astray by convincing him to go to Pleasure Island. On his way he befriends Lampwick, a misbehaved and destructive boy who convinces Pinocchio to act like he and the other boys on Pleasure Island do. Pinocchio enjoys gambling, smoking, getting drunk and destroying Pleasure Island much to Jiminy's dismay. However Jiminy discovers that the island has the power to turn boys who "make jackasses of themselves" into literal donkeys. These boys are then sold to work in the local salt mines.
Lampwick is transformed but Pinocchio manages to escape with only his ears transformed and having gained a donkey's tail, they escape Pleasure Island and return to Geppetto's house. However, when he returns to Geppetto's store the carpenter and his pets, who somehow learned that Pinocchio was on Pleasure Island, have gone to sea in search for him.
To search for Geppetto, Pinocchio and Jiminy manage to traverse underwater. However they are eaten by the gigantic whale Monstro, within they find that Geppeto and his pets also reside there having been swallowed themselves. Pinocchio devises an escape plan by burning wood in order to make Monstro sneeze. The plan works but in the process Monstro chases after them. Geppetto nearly drowns and asks Pinocchio to save himself, by swimming for shore. Pinocchio grabs his father and tries to swim to shore, but in the process, Monstro bumps into a huge boulder and causes a huge tidal wave, which washes everyone onto shore. Geppetto survives, but Pinocchio drowns and is dead.
Geppeto, Jiminy and the pets are distraught and return home with Pinocchio's body. The Blue Fairy decides that Pinocchio has proved his worth and brings him back to life and also turns him into a real boy. Everyone is overjoyed and they begin to celebrate. The Blue Fairy rewards Jiminy with the medal he requested when he was assigned as Pinocchio's conscience. The movie ends with Jiminy singing the classic song "When You Wish upon a Star".
Originally, Pinocchio was to be depicted as a Charlie McCarthy-esque wise guy, equally as rambunctious and sarcastic as the puppet in the original novel. He looked exactly like a real wooden puppet with, among other things, a long pointed nose, a peaked cap, and bare wooden hands. But Walt found that no one could really sympathize with such a character and so the designers had to redesign the puppet as much as possible. Eventually, they revised the puppet to make him look more like a real boy, with, among other things, a button nose, a child's Tyrolean hat, and standard cartoon character 4-fingered (or 3 and a thumb) hands with Mickey Mouse-type gloves on them. The only parts of him that still looked more or less like a puppet were his arms and legs.
Additionally, it was at this stage that the character of the cricket was expanded. Jiminy Cricket (voiced by Cliff "Ukelele Ike" Edwards) became central to the story. Originally the cricket wasn't even in the film. Once added, he was depicted as an actual (that is, less anthropomorphized) cricket with toothed legs and waving anntenae. But again Walt wanted someone more likable, so Ward Kimball conjured up "a little man with no ears. That was the only thing about him that was like an insect."
Mel Blanc (most famous for voicing many of the characters in Warner Bros. Looney Tunes and Merrie Melodies cartoons), was hired to perform the voice of Gideon the Cat, who was Foulfellow the Fox's sidekick. However, it was eventually decided for Gideon to be mute (just like Dopey, whose whimsical, Harpo Marx-style persona made him one of Snow White's most comic and popular characters). All of Blanc's recorded dialogue in this film was subsequently deleted, save for a solitary hiccup, which was heard three times in the film.
Many of these ideas were later used in Geppetto (2000)
The influential abstract animator Oskar Fischinger contributed to the effects animation of the Blue Fairy's wand.
Film critic Leonard Maltin would later write that "with Pinocchio, Disney reached not only the height of his powers, but the apex of what many critics consider to be the realm of the animated cartoon.
Pinocchio was not commercially successful when first released, and Disney only recouped $1.9 million against a $2.6 million budget. The film achieved some success at the American box office, but was not able to profit, due to its poor performance in Europe. The timing of the film's release was a factor, with World War II cutting off European markets. Although the United States had not yet entered the war, the mood of the times may have meant less interest among Americans in seeing fantasy stories as they were in the days of Snow White. It also lacked the romance element that had proven popular in Snow White. To add insult to injury, Paolo Lorenzini, nephew of the original story's author, had beseeched the Italian Ministry of Popular Culture to charge Disney with slander for portraying the Italian puppet "so he easily could be mistaken for an American."
Nevertheless, there were positive reactions to the movie as well. Archer Winsten, who had criticized Snow White, wrote: "The faults that were in Snow White no longer exist. In writing of Pinocchio, you are limited only by your own power of expressing enthusiasm." Also, despite the poor timing of the release, the film did do well both critically and at the box office in the United States. Jiminy Cricket's song, "When You Wish Upon a Star," became a major hit and is still identified with the film, and later as a fanfare for The Walt Disney Company itself. Pinocchio also won the Academy Award for Best Song and the Academy Award for Best Scoring of a Musical Picture. In 1994, Pinocchio was added to the United States National Film Registry as being deemed "culturally, historically, or aesthetically significant." In 2001 Terry Gilliam selected it as one of the ten best animated films of all time and in 2005 Time.com named it one of the 100 best movies of the last 80 years. Many film historians consider this to be the film that most closely approaches technical perfection of all the Disney animated features. Pinocchio earned $84,254,167 at the box office.
In June 2008, the American Film Institute revealed its "Ten top Ten"—the best ten films in ten "classic" American film genres—after polling over 1,500 people from the creative community. Pinocchio was acknowledged as the second best film in the animation genre, after Snow White.
On Classic Disney: 60 Years of Musical Magic, this includes When You Wish upon a Star on the blue disc, Give a Little Whistle on the purple disc, and I've Got No Strings on the orange disc. And on Disney's Greatest Hits, this also includes When You Wish upon a Star on another blue disc, I've Got No Strings on the green disc, and Give a Little Whistle on the red disc.