- Directors: Jim Henson
- Producers: George Lucas
- Writers: Dennis Lee, Jim Henson, Terry Jones
- Genres: Adventure, Family, Fantasy, Musical
- Actors: Jennifer Connelly, David Bowie, Toby Froud
Protagonist Sarah Williams (Connelly) is a 15-year-old who loves reading and acting out fairy tales, whose parents are divorced and whose mother is a moderately famous actress. The movie opens with a scene of Sarah rehearsing lines from her book Labyrinth in a park. While trying to remember the final line of a speech in the book, she loses track of time, forgetting that she must babysit her infant half-brother, Toby. Upon belatedly remembering this, she runs home to find her stepmother Irene waiting angrily for her. They quarrel, after which Irene leaves with Sarah’s father on a date, while Sarah remains behind to babysit Toby. Here, the already furious Sarah realises that her treasured teddy bear, Lancelot, is missing from her room. Storming into Toby’s room, she finds Lancelot and reprimands Toby, whereupon he begins to cry. Sarah, possibly to tease him further in revenge, begins rehearsing more lines from Labyrinth, telling an account of a maiden granted special powers by the King of Goblins. According to the story, the girl (whom Sarah apparently uses to represent herself) could no longer stand her life and wishes for goblins to take away her screaming baby brother. As she ends the story and turns off the light, she remarks, “I wish the goblins would come and take you away…right now”, whereupon Toby suddenly stops crying. Worried, Sarah enters his room, to find that Toby has vanished.
In Toby’s room, she gives him Lancelot, then returns to her room. As Sarah clears her dressing table, she seems confused about whether she has undergone the turning point in her life between childhood and adulthood. Hoggle appears, along with Ludo and Sir Didymus, as images in the mirror. They seem to be bidding her goodbye as she leaves behind the fantasies of childhood, but remind her that they will still be available “should you need us”. Sarah insists she presently needs them, whereupon they appear in her bedroom. The film closes as the Labyrinth’s creatures celebrate in her room. Outside, the owl Jareth watches the party and then flies away into the night.