Captain Picard, Guinan, Ro Laren and Keiko O'Brien are returning to the Enterprise, but an anomaly causes them to materialize on the transporter pad as 12-year old children. Although the four still retain an adult mind, the crew have trouble taking them seriously, and Captain Picard is convinced by Dr. Beverly Crusher to temporarily relinquish command of the ship. After turning over command of the Enterprise to Commander Riker, Captain Picard ponders resigning his Starfleet commission, albeit temporarily, in order to pursue other interests. Meanwhile Keiko and Ro find their own situations to be quite distressing. Keiko is dismayed by her husband's reluctance to be with her as she now inhabits the body of a prepubescent girl. She is further saddened when she is not recognized by her daughter. Ro Laren is upset at being reminded of her unpleasant childhood. Guinan, however, relishes the opportunity to be a child again. Though Ro initially is disdainful of Guinan's enthusiasm, she eventually softens and joins Guinan in jumping on a bed and other childish pursuits.
Dr. Crusher determines the cause of the de-aging and postulates how to reverse the process under controlled conditions. Before they can do so, two Klingon warships decloak and attack the Enterprise. Ferengi board the ship and take control of the bridge, but Riker manages to lock out the main computer, preventing the invaders from taking control of the ship. The Ferengi beam most of the adults on board to a nearby planet and corral the children, including Picard and his party, into the schoolrooms on the ship. Picard and his group try to use the classroom computers to regain control of the ship, but because of the computers' limited functionality and condescending interface, they must devise an alternate plan of attack.
Picard pretends to be Riker's son and demands to see his "father," even throwing a tantrum until his demand is met. He asks Riker to unlock the computer console in the schoolroom, using the ruse that none of the computer games will work. After Picard is returned to the schoolroom, the lead Ferengi threatens to harm the children if Riker does not unlock the computer and teach his lieutenant how to operate the Enterprise. Riker pretends to instruct the Ferengi officer, but only spouts deliberately meaningless treknobabble as he unlocks the computer console in Picard's schoolroom. Time is bought by the Ferengi demanding that Riker explain everything in detail, as the Ferengi do not want to appear incapable of understanding such complex information.
With command function enabled, Picard is able to activate a transporter safety function. With help from Worf's son, Alexander, Guinan, and Ro, they use comm badges to trap most of the Ferengi on a transporter pad with their weapons disarmed and the exit blocked by a force field. Once most of them are detained, the children and Riker are able to overpower the remaining members and retake the Enterprise. The transporter is used to return Picard, Guinan, and Keiko to their adult states. Ro, buoyed by her experience, decides to remain a child for just a little while longer and draw some pictures, something she never did during her childhood.