Mr. Peabody (Ty Burrell) takes his son, Sherman (Max Charles) to work at 'Peabody Enterprises' one day, this gives Sherman the opportunity to sneak into his father's lab without his permission when he is not there. While inside the lab, Sherman discovers several radioactive substances as well as a giant spider web with a radiation affected spider inside it. The spider falls onto Sherman and bites him on the neck, the spider dies of radiation poisoning, but Sherman is affected by the spider's bite. When arriving home, Sherman's molecular structure discovers the spider bite has given him peculiar abilities, like super senses, the power to crawl onto any surface, super strength, super speed, and shooting web out of his wrists. When a robber breaks into the penthouse, Sherman uses his spider senses to dodge a bullet shot at him by the robber, and kills him by using his webs to slingshot the robber out the window. Now amazed by his new powers, Sherman declares he will use them to fight crime and protect New York as 'Spider-Boy'.
Five months later, Spider-Boy is considered a local hero among the citizens of New York City. Sherman keeps his identity a secret from Mr. Peabody to keep him safe from harm. On the first day of school, Sherman lies about going to the bathroom to chase an armed van being chased by police as Spider-Boy and returns as soon as the people inside the van have been caught and arrested. During lunch, Penny Peterson (Ariel Winter) picks on Sherman by calling him a dog and tries to knock his sandwich out of his hands, but catches it before it hits the floor due to the spider senses. Sherman and Penny end up getting into a fight and gets sent to the office for knocking Penny onto her feet.
Ms. Grunion (Allison Janney) a bigoted social worker threatens Peabody to take Sherman away if he does not pass an upcoming home inspection tomorrow night. On her way home, Grunion discovers a cabin containing the octo-tron, a device with four robotic tentacles attached to a large waistband with a metal spine that connects to a host. Grunion attaches the device to herself and now calls herself Dr. Octopus.
Sherman visits Penny as Spider-Boy and unmasks himself in front of her, making her regret everything she did to him and that she is really the one at fault. Spider-Boy takes Penny to the top of the Chrysler Building and have pizza on top of the building. When Sherman discovers Dr. Octopus destroying a city street, Spider-Boy takes her on and he wins, but loses the dog whistle that Peabody gave him on the first day of school. Dr. Octopus discovers Sherman's name engraved in the whistle and discovers Spider-Boy's real identity.
Upon returning Penny home, she and Spider-Boy share a kiss (Spider-Boy hanging from the ceiling upside down and Penny being on the floor). When returning home, Mr. Peabody and Sherman get into a fight when Peabody tries to get Sherman to tell what he's hiding from him. After Peabody tells Sherman that secrets have a cost, Sherman declares he is not a dog and Peabody returns his anger by calling him a bad boy. Sherman runs away in tears only to see Dr. Octopus destroying a nearby Starbucks and fights her, only to be captured.
Dr. Octopus brings Spider-Boy to the Peabody penthouse only to be unmasked in front of Mr. Peabody, Penny, and her parents (Leslie Mann and Stephen Colbert). Sherman confesses how he got his powers and Peabody cuts him free of his bindings, allowing Sherman to fight Dr. Octopus and for Peabody to be knocked out the window and suffer a massive concussion by hitting the back of his head on the top of a fire hydrant. Enraged at this, Sherman and Dr. Octopus fight to the death at the top of a construction site. Sherman removes the device from Dr. Octopus' back and she dies at her own hand by impaling herself in the chest with a pipe by accident (Meaning to kill Sherman when the spider senses made him dodge the pipe). As Grunion dies, Sherman tells her that people like her who let hatred, bigotry, and obsession blind them and have nothing worth fighting for will always be weak. After Grunion dies, Sherman leaves the construction site.
One month later, Sherman and Peabody make up for their fight and Peabody keeps Sherman's superhero identity a secret. On Sherman's birthday after blowing out the candle on his cake, a new villain named 'Rhino' attacks the streets. Peabody tells Sherman "Go on, go and get 'em" and Spider-Boy knocks Rhino to the ground with a manhole cover.
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