Dorothy (Fairuza Balk) returns home to Kansas, but no one believes her story about the Land of Oz. She soon starts suffering from insomnia and Aunt Em sends her to a hospital. She is put under the care of sadistic Dr. Worley, who performs horrible experiments on children using electric shock therapy and cruel Nurse Wilson there.
Just before Dr. Worley can perform his experiment, a storm knocks out the power, leaving Dorothy unattended. Thanks to the help of a mysterious girl who she met earlier, she escapes during the storm into a chicken coop that sends her back to Oz, which is a very different place from when she left it. Her pet hen, Billina, who was having trouble laying eggs back home, can now talk. She and Dorothy escape from their stranded state of the Deadly Desert and hope to visit her old friends. However, upon discovering her old house (the one that landed on the Wicked Witch of the East the first time she visited) she finds the Yellow Brick Road in shambles. This leads her to the Emerald City, which is no longer green and its citizens, including the Tin Woodman and Cowardly Lion, have been turned to stone. Upon her arrival, she finds a message saying "Beware the Wheelers." She and Billina are soon chased by Wheelers (people who have wheels instead of hands and feet) into a secret room within the city, where they are told that chickens are illegal. It is in there that Dorothy meets Tik-Tok, the mechanical royal army of Oz. He, being mechanical, explains that (seeing how he's not alive) he must be kept wound up tightly, so as to prevent his thought, speech, and action from running down. Dorothy, Billina, and Tik-Tok (now their self-appointed servant) escape the room and are able to fight off the Wheelers, in which one directs them to Princess Mombi, who explains the Nome King had taken over the Emerald City and captured the Scarecrow. She, who has many interchangeable heads (and the main one bears a striking resemblance to Nurse Wilson) wants Dorothy's for her collection. Dorothy, refusing, is locked up along with Billina in Mombi's attic. There, they meet Jack Pumpkinhead, a being who's "mother" was created to scare Mombi. Dorothy devises a plan and thanks to Jack, she is able to wind up Tik-Tok (who wound down as she was captured) and retrieve the Powder of Life from Mombi's head collection while she's asleep, but not before waking her up. Meanwhile, Tik-Tok, Jack, and Billina attach the head of a Gump to a sofa that they intend to bring to life and make fly. They narrowly escape Mombi and head towards the Nome King's mountain.
However, the Gump is not too well put together and it falls apart, sending the group plummeting down onto the Nome King's mountain. He, after learning of their identities, confronts Dorothy and tells her that the emeralds were rightfully his and the Scarecrow had been turned into an ornament for his collection. As soon as the others join Dorothy again, the Nome King proposes that they play a game with him. If they touch the correct ornament and say the word "Oz" within three guesses, then the Scarecrow will appear and they could go free. But he did not tell them that if they failed to guess correctly, they would turn into ornaments as well. One by one, they go into the ornament room, and fail to guess correctly, thus allowing the Nome King to become more and more physically human from his rock-like state. During Tik-Tok's turn, the Nome King tells Dorothy that thanks to her, the ruby slippers are now his and he could use them to send her back home, never to think of Oz again. She refuses and goes in after Tik-Tok, who lured her in by pretending to wind down as a part of his plan to see if she could see what he is changed into. His plan fails however, as he is nowhere to be found after his final guess. Mombi travels to the Nome King's mountain and tries to warn him about Billina, but he, cutting her off, says that he already knows of Dorothy's presence. He reveals that soon, after she fails, there will be no one left who remembers Oz and that he will be completely human. Meanwhile, in the ornament room, Dorothy, after two guesses, is able to find the Scarecrow as a green ornament. They then rescue the others (who were green ornaments as well) leaving the Nome King to revert to his original form. He stops them and tries to eat them, starting with Jack, but Billina, who is hiding in his head, lays an egg that falls into the Nome King's mouth. It is revealed that eggs are poisonous to nomes and he disintegrates, leaving the ruby slippers for Dorothy to take. As the mountain collapses, she clicks her heels and wishes for all Ozians (including an imprisoned Mombi) to return there safely and the Emerald City and everyone in it to be restored.
The ruby slippers' magic work and a celebration is thrown. The Ozians encourage Dorothy to be the Queen of Oz, but she says despite the friendships she has cherished, she has to go back home to Kansas. The understanding citizens comfort her in wishing that she could be in two places at once. But as she says this, the ruby slippers reveal a girl in the mirror behind her. She turns out to be the same mysterious girl (who presumably drowned) who helped Dorothy escape from the hospital. She reveals that her name is Ozma, rightful ruler of Oz and Jack's real "mom". She promises Dorothy that should she ever need to return, she is always welcome.
Dorothy returns home and is found by Toto, Aunt Em, Uncle Henry, who tell her that the hospital burned to the ground after being hit by lightning (with Dr. Worley in it) and Nurse Wilson was taken to jail. Back home, Dorothy sees Ozma as her own reflection with Billina (who did not return with her) in her mirror. She tries to notify Aunt Em, but a hush from Ozma tells her to keep Oz a secret. She, smiling, runs outside to play with Toto as the film ends.
- Fairuza Balk as Dorothy Gale
- Brian Henson as Jack Pumpkinhead (voice)
- Stewart Larange as Jack Pumpkinhead (puppeteer)
- Sean Barrett as Tik-Tok (voice)
- Michael Sundin and Tim Rose as Tik-Tok (puppeteers)
- Nicol Williamson as Dr. Worley/Nome King
- Jean Marsh as Nurse Wilson/Mombi
- Piper Laurie as Aunt Em
- Matt Clark as Uncle Henry
- Mak Wilson as Billina (puppeteer)
- Denise Bryer as Billina (voice)
- Lyle Conway as the Gump (voice)
- Steve Norrington as the Gump (puppeteer)
- Pons Maar as the Lead Wheeler/Nome Messager
- Emma Ridley as Ozma
- Justin Case as the Scarecrow
- Deep Roy as Tin Woodman
- John Alexander as the Cowardly Lion/Wheeler
- Jon Jacobs as the Cage Carrier
- Bruce Boa as the Policeman
- Tansy as Toto
Walter Murch began development on the film in 1980, during a brainstorming session with Walt Disney Productions production chief Tom Wilhite. “It was just a fishing expedition on both of our parts," Murch remembered. "But one of the questions he asked was, ‘What are you interested in that you think we might also be interested in?’, and I said, ‘Another Oz story.’ … And Tom sort of straightened up in his chair because it turned out, unbeknownst to me, that Disney owned the rights to all of the Oz stories. And they were particularly interested in doing something with them because the copyright was going to run out in the next five years.”
The film is based on the second and third Oz books, The Marvelous Land of Oz (1904) and Ozma of Oz (1907). The element about Tik-Tok being "The Royal Army of Oz" derives from Tik-Tok of Oz (1914), in which he is made the Royal Army of Oogaboo, and also makes frequent cries of "Pick me up!" That book was itself based on a dramatic production, The Tik-Tok Man of Oz (1913). Murch also used the book Wisconsin Death Trip as an historical source for the film.
Murch took a decidedly darker take on Baum's source material than the 1939 adaptation, which he knew starting out would be a gamble. Between the development period and actual shooting, there was a change of leadership at the Walt Disney Studios (with Wilhite being replaced by Richard Berger), and the movie's budget increased. Once shooting began, Murch began to fall behind schedule, and there was further pressure from the studio, leading to Murch being fired as director for a short period. George Lucas and other high profile filmmakers including Francis Ford Coppola supported Murch in discussions with the studio, and Murch was reinstated and finished the film.
The film was developed and produced without the involvement of Metro-Goldwyn-Mayer, the studio behind the 1939 film, The Wizard of Oz. No approval was necessary, because by 1985, the Oz books on which the film was based were in the public domain, and the subsequent ones had been optioned to Disney many years earlier. A large fee was paid, however, to use the ruby slippers, which were still the intellectual property of MGM at the time (as the ruby slippers had been created specifically for the 1939 film to replace the silver shoes of the original stories).
The film received mixed reviews upon its release. The film-critics aggregator Rotten Tomatoes records 55% positive reviews based on 22 reviews. Those who were familiar with the Oz books praised its faithfulness to the source material of L. Frank Baum. However, many critics described the film's tone and overall content as slightly too dark and intense for young children. "Children are sure to be startled by the film's bleakness," said The New York Times's Janet Maslin. Canadian film critic Jay Scott felt the protagonists were too creepy and weird for viewers to relate or sympathize with: "Dorothy's friends are as strange as her enemies, which is faithful to the original Oz books but turns out not to be a virtue on film, where their errieness has a tendency to remain eerie no matter how often we're told it's not." "It's bleak, creepy, and occasionally terrifying," added Dave Kehr of the Chicago Reader. The film earned $2,844,895 in its opening weekend, finishing in seventh place. The film ultimately grossed $11,137,801 in North America.
The film received an Academy Award nomination for Best Visual Effects, but lost to Cocoon. Fairuza Balk and Emma Ridley were nominated for Young Artist Awards. The film received two Saturn Award nominations for Best Fantasy Film (lost to Ladyhawke) and Best Younger Actor for Fairuza Balk (who lost to Barret Oliver for D.A.R.Y.L.).
The film’s interpretation of Oz is featured in the Storybook Land Canal Boats at Disneyland Paris. Amelie Gillette of the The A.V. Club frequently refers to the film's dark nature as unsuitable for its intended audience of young children despite it being one of her favorite movies growing up.
- After the success of Snow White and the Seven Dwarfs, Walt Disney had interest of doing The Wizard of Oz for his next film. Sadly, when Roy Disney called to acquire the rights from Baum's estate, he was told that they had already been sold to Samuel Goldwyn, and later Louis Mayer, thus creating the classic 1939 musical film.
- Disney acquired the rights to Oz in 1954 to use in the Disneyland series and the unfinished Rainbow Road to Oz.
- Like The Wizard of Oz, characters outside of Oz have counterparts of characters there, which are portrayed by the same actor. Dr. Worley's counterpart is the Nome King, who shares the same smoking pipe and ruby ring, and who says similar lines ("I know just the thing to cheer you up" and "When you wake up, you'll never think of Oz again"). Nurse Wilson's counterpart is Princess Mombi. The final fates of Dr. Worley and Nurse Wilson mirror those of the Nome King and Mombi.
- Tik-Tok was given to George Lucas as an after filming gift and is now on display at Skywalker Ranch. Coincidentally, small golden Tik-Toks were given to crew members after the film's completion.
- To commemorate the release of the film, a float was made for the Main Street Electrical Parade. It mimicked the hall of mirrors in Mombi's castle with live actors playing Dorothy, the Scarecrow, and Jack Pumpkinhead and a marionette of Tik-Tok would walk with it. Unfortunately, the mirrors were its undoing as it caught on fire one night and was never restored. The Tik-Tok marionette is now in the home of a private collector.
- A beetleworkz of Tik-Tok (based on the above mentioned) appears in the Floatyard in Epic Mickey 2: The Power of 2.
- In the Disneyland Paris]] version of the Storybook Land Canal Boats, a miniature model of Oz can be seen in the style of this film. Small animated versions of Dorothy, the Scarecrow, the Tin Man, and the Cowardly Lion can be seen in front of it. The music that accompanied the aforementioned parade float plays as riders pass by the scene.
- Many of the people in the group present in the film's coronation scene were many characters who appeared in the Oz books. These being the following - Glinda, some Munchkins, the Braided Man, the Shaggy Man, Button-Bright, Polychrome the Rainbow's Daughter, the Patchwork Girl, Cap'n Bill (holding the Magic Flower), Tommy Kwikstep, the Frogman, and Notta Bit More the Circus Clown.
- Return to Oz fansite with creator interviews