NOTE: This spoiler was sent in by Laura.
The movie starts with a woman having a baby in the dead of night. A man named Miraz is told he now has a son. An old bearded man hears the news, sneaks into Prince Caspian's (Ben Barnes) room, wakes him up, and tells him he needs to leave because his aunt has had a son. They start to sneak away in a secret passage behind a wardrobe, but before they leave, they see soldiers come into Caspian's room and shoot his bed full of arrows.
It turns out that Caspian the 10th is the son of the dead king, so he is the rightful heir, but Miraz would rather see his own son get the throne. Having anticipated this scenario, the old man, his tutor, sends him away with an item that he must use "only when he has the greatest need." Caspian flees into the forest, which the soldiers fear based on superstition. A low-hanging branch unfortunately knocks him out, and some dwarves come out to see what the commotion is. Seeing that he is a human "Telmarine", they decide to kill him. Trumpkin sees the soldiers approach and takes out a knife to deal with them while Nikabrik advances on Caspian. Panicked, he pulls out the item from his tutor -- a horn with a lion's head. He blows it, even while Nikabrik says, "Don't!”
Back in the real world, we get the impression the Pevensie kids are not adjusting. Susan (Anna Popplewell) often sits by herself, and Lucy (Georgie Henley) runs up to her because she needs to 'show her something'. This something is Peter (William Moseley) in a fight with multiple boys in the subway. A crowd has gathered, and the girls watch, aghast, as Peter loses, until Edmund (Skandar Keynes) runs up and joins the fray. The police quickly break it up. Peter insists he had it under control and did not need Edmund. The girls remark that this happens often with Peter, and he responds that he hates it when people treat him like a kid. They're all miserable because, at the end of the last movie, they were full-grown adults before they returned to Earth, and now they're children again.
Susan says that she thinks they'll never go back to Narnia. Then, naturally, the horn summons them. They appear on a cliff by the ocean. After exploring some ruins nearby, they realize they have returned to their old castle and seat - Cair Paravel. They find a passage underground to some chamber where all their old stuff is waiting for them: clothes, weapons, Aslan's gifts, armor, etc. They realize they've been gone for hundreds of years, but Cair Paravel was destroyed by war, not time.
Meanwhile, back at the Telmarine castle, the remaining lords of the land bicker about how Caspian is missing and more and more of their fellow lords die lately. Miraz comes in and claims Caspian was really abducted by dwarves. Everyone laughs, saying Narnians are extinct or fairy tales, until someone brings in Trumpkin, the dwarf who saw Caspian. The lords are somewhat appeased, but Miraz is still suspicious. He goes to the tutor and asks him if he told Caspian about Narnians and the prophecy concerning him. The tutor insists he did not, but Miraz puts him in jail and has Trumpkin taken out to be killed.
Some soldiers on a boat tie the dwarf up, and then push him overboard. Luckily, Susan, Lucy, Peter, and Edmund are waiting. They rescue Trumpkin and prove to him they're the kings and queens of old through some expert sword play. He grudgingly goes with them into the forest. Unfortunately, Lucy sees a bear that she thinks will speak to her, but it just tries to kill her. The Pevensies' learn that a lot of the animals have reverted to being dumb and mute, and the trees no longer talk. They wander through the forest with Peter getting them lost, but then Lucy sees Aslan on the other side of a river and ravine. No one else sees him, though, and they do not believe her, wondering why only she would see him. She eventually decides to go with them and not follow the lion.
Caspian has woken up by now and overhears a dwarf and a badger talking about him. After some initial distrust and brandishing of weapons, they tell him about his destiny -- bringing back the "Kings and Queens of Old" and saving Narnia. While they walk through the forest together, some of Miraz's soldiers find him and shoot the badger. Caspian decides not to leave the badger behind, earning the Narnian's trust. Sir Reepicheep, a talented mouse swordsman, arrives just in time to kill the soldiers but is persuaded not to kill Caspian. More forest creatures appear, and eventually, Prince Caspian promises them he will give them back Narnia if they fight with him against Miraz. They agree.
Peter and company arrive at another spot in the river and see that the Telmarines are building a bridge so they can wage war against the Narnians. Nearby, Miraz is asking one of his generals about some missing weapons, and then forces his general to kill some of his own men so that the Narnians look more bloodthirsty. Seeing that they can't go any farther, Peter and company go back to the place where Lucy saw Aslan, fall into a hole, and conveniently find themselves a path. That night, Lucy has a dream of Aslan. When she awakens, she wanders through the woods like in her dream, but stumbles upon some Narnian creature. Peter sneaks up on her and 'saves' her, then runs into Caspian. They mistake each other for enemies and fight until someone recognizes Peter is the High King. He establishes command of the army Caspian just raised.
The Narnians make their way to more ruins, which they soon realize is the altar and temple where the White Witch in the previous film sacrificed Aslan. They start to make a plan about how they'll fight against Miraz. Lucy wisely points out that this doesn't have be "they kill us or we kill them" situation, but everyone ignores her. Peter and Caspian argue about what to do, with Caspian wanting to defend the cave/temple and Peter wanting to invade Miraz's castle. They decide to invade, but the Peter-Caspian rivalry intensifies, and Susan, clearly attracted to Caspian, is going back and forth about what side she is on.
Invading the castle works out quite well until Caspian decides to rescue his tutor. His tutor lets it slip that Miraz killed Caspian's father, so Caspian now deviates from the plan entirely to go kill Miraz. Susan and Peter walk in, and eventually they are in a situation where Susan has an arrow pointed at Miraz's wife, who has an arrow at Caspian, who has a sword at Miraz's neck. The wife shoots, Miraz escapes, and chaos breaks loose. Basically, the deviation from the plan has had a ripple effect such that the Narnians lose some of their advantage. A lot of them die, and they have to retreat entirely. The gates close at Miraz's behest, trapping some Narnians inside the castle who are easily slaughtered as Peter watches.
The Narnians return to the ruins, with Peter blaming Caspian for deviating from the plan and Caspian blaming Peter for even wanting to invade. They prepare for Miraz's inevitable counter-invasion and wonder why Aslan still hasn't come. Nikabrik, the dwarf, approaches Prince Caspian with an offer of a "deeper magic" that can solve all his problems. He is interested until the White Witch appears in a sheet of ice. She needs some of his blood to escape, and Nikabrik and his cronies cut his hand to start the process. Luckily, Peter, Lucy, Susan, and Edmund run in, fight off everyone, and prevent this from occurring. The White Witch recognizes Peter, and makes him the same offer. He stares at her, almost as if he'd take it, but Edmund shatters the sheet of ice from behind. He tells Peter he's sure he had that under control, just like the subway fight.
Miraz and his Telmarine army arrive shortly after. Lucy and Susan set off into the woods to find Aslan, but they are followed, so Susan stays behind to fight off the soldiers so Lucy has a chance. She does well, and when she is outnumbered, Caspian saves her. Back at the ruins, Peter has challenged the newly-crowned King Miraz to a swordfight. They go at it for quite some time with injuries on both sides. Inevitably, Peter gets the best of Miraz, but offers his sword to Caspian to finish the job. Caspian decides not to, but one of Miraz's generals betrays him and sticks an arrow into Miraz's side, then claims it was the Narnians cheating. The battle is on.
The soldiers rush the Narnians, but they have a plan -- knock down all the walls in their underground chamber to make a giant sink hole between them and the Telmarines. It works, but their tricks just aren't enough. They start to fall back, to hide in the cavern, but the Telmarine generals see their plan and catapult some rocks right at the opening so that it collapses shut. It starts getting worse, but then Lucy reaches Aslan. He chides her a little for not coming sooner, and then rouses the trees from their slumber. They start stomping into the battle, roots ripping up the ground, grabbing soldiers and crushing the catapults as they go. The Telmarines panic and rush back to that river bridge they built, but Lucy and Aslan are waiting on the other side. A huge river spirit washes the bridge away, effectively finishing the fight.
Caspian is restored as King back at the castle, and Aslan offers to take any Telmarines back to their homeland, which is really Earth, too. They don't believe that Aslan isn't just killing them as soon as they walk through the portal, so Peter offers up him and his siblings as proof that it is not a death trap. He then reveals to Lucy that he and Susan will never come back to Narnia, but Lucy and Edmund might. Susan gives Caspian a goodbye kiss, and then the siblings walk through the portal, back in the subway station where they started.