The first full length, computer animated movie. The initial concept was based on the short Tin Toy (1988) which featured a wind-up toy running from a baby. John Lasseter received a special achievement award from the academy in 1996 for the film and its contributions to computer animation.
The movie opens on a little boy, Andy, playing with a cloth cowboy doll named Woody. Despite being an older toy (complete with pull string voice box), Woody is clearly Andy's favorite toy and the hero of his adventures. However, when the humans are out of the room, the toys come to life. Woody serves as leader of the toys, helping them deal with the immediate crisis of Andy's birthday party (where he may get new toys to replace his old toys), the problem neighbor boy, Sid, who destroys toys, and an impending move. Woody deploys some green army men (lead by Sarge) with a baby monitor to monitor what Andy gets for his birthday. The party goes well, with no new toys to compete with them, but the baby monitor falls down and the sound cuts out when Andy is opening a surprise present. By the time the baby monitor is working again, Andy and his friends are returning to Andy's room so the toys must play dead. Woody is swept off the bed for the new, mystery toy which is revealed to be a spaceman action figure named Buzz Lightyear.
Unlike the other toys, Buzz believes he is the real Buzz Lightyear, an actual space explorer who can actually shoot lasers and fly. Buzz can seemingly do no wrong and continually seems to replace Woody both in terms of being Andy's new favorite toy and being a hero in the eyes of the other toys. Woody grows progressively more jealous and plans to knock Buzz behind a desk (so he can just be lost/forgotten there for a while), but the plan goes wrong and instead Buzz is knocked out the window. The other toys see that Woody "murdered" Buzz, but Woody is then taken with the family to the Pizza Planet restaurant. Buzz climbs in the car and confronts Woody at a gas station, causing them to both be left behind. The two have to cooperate and hitch a ride in the Pizza Planet delivery truck to try to meet Andy at the restaurant. However, Buzz drags them both into a rocket-shaped crane machine (thinking that it is a real rocket), where they are won by Sid.
At Sid's house, both Buzz and Woody are terrified as Sid gives a toy to his vicious dog, Scud, to destroy and steals his little sister's doll, cuts off its head, and replaces it with a dinosaur's. In his room, Sid has other horrible, monster toys constructed from parts of other toys like a one-eyed baby doll head attacked to a mechanical, spider body. While at Sid's house, Buzz sees a commercial for Buzz Lightyear action figures, with the ad explicitly stating that the toys do not fly. Buzz tests this, only to fall, one of his arms popping out in the process. This puts Buzz largely out of commission as he tries to reconcile with the fact that he is a toy. Woody tries to convince the rest of Andy's toys to help him back, but they see Buzz's unattached arm and think the worse. However, Woody soon discovers that Sid's toys are actually friendly and help put back together other toys (like the doll and the dinosaur) and quickly reattach Buzz's arm. Before the two can escape Sid straps Buzz to a rocket and plans to blow him up tomorrow, the same day Andy's family moves. Buzz and Woody have a heart to heart and both realize that they need to do what's best for Andy.
Woody and Sid's toys make a plan to help Buzz and Woody escape and make sure Sid never tortures toys again. After luring the dog outside, they all gather in the backyard and begin talking and walking towards Sid, scaring him away. Buzz and Woody begin running towards the departing moving van but are pursued by Scud. Buzz tackles the dog, allowing Woody to make it, but Woody gets Andy's RC car, and pushes it over the edge to go and save Buzz. The other toys view this as him trying to lose another toy and throw Woody out of the car too. Buzz and Woody ride the RC car, and manage to escape the dog. The other toys see Buzz and Woody and try to help, but the car runs out of batteries and the truck drives on. They light the rocket on Buzz's back and shoot towards the truck where they drop off the RC car, buzz detaches the rocket shortly before it explodes by spreading his wings, and they fly into the car and landing on the box next to Andy. Andy sees his missing toys had been in the car the whole time, just where he left them.
At their new house it's now Christmas and everything is peaceful, and Buzz and Woody are friends. Now the toys are hopeful for what Andy might get, though are still monitoring the situation. Woody is laughing that nothing could be worse than Buzz, and it's revealed that Andy got a puppy for Christmas.