In the summer of 1965, Walt and Laura Bishop (Bill Murray and Frances McDormand) live on the New England island of New Penzance with their three young sons and troubled 12-year-old Suzy (Kara Hayward), who is secretive, prone to fits of aggression, and is never without her binoculars. The island is nervously awaiting a violent storm, due to hit in a few days' time.
On the other side of the island, Troop 55 of the Khaki Scouts is spending the summer at Camp Ivanhoe, under the leadership of Scoutmaster Randy Ward (Edward Norton). It is noticed that the most unpopular scout, 12-year-old Sam Shakusky (Jared Gilman), has fled camp during the night, leaving Ward a letter of resignation from the Scouts and stealing a canoe and supplies. Ward sends the remaining scouts (and the camp dog, Snoopy) out to hunt for Sam, and the boys speak of him with a mixture of hostility and fear, as he is believed to be emotionally disturbed and possibly dangerous.
Unbeknownst to anyone but themselves, Sam and Suzy had been pen pals for months after meeting backstage during a production of "Noye's Fludde" at St. Jack's church on the mainland. Sam was drawn to Suzy's frank and rebellious personality, while Suzy was charmed by Sam's bold yet casual manner. Over the next year, they develop a plan to reunite in the summer and run away together. When the chosen date approaches, Sam escapes camp and Suzy slips out of her house with her binoculars, her cat, six library books, and her brother's record player. They meet in a field and begin their journey.
Scoutmaster Ward notifies Police Captain Sharp (Bruce Willis) of Sam's absence, and Sharp makes a call to what he assumes is Sam's home. It is revealed that Sam is an orphan (which was not listed in Wards camp records), and that his foster parents are refusing to take him back, due to a long history of strange and sometimes dangerous behaviour on the part of Sam. Sharp and Ward are flummoxed, knowing their only available option is to turn Sam over to Social Services once they find him.
Meanwhile, Suzy's parents discover she is missing, and discover her plan by reading a shoebox full of letters she received from Sam. Working with Captain Sharp (with whom Laura Bishop is having an affair), they combine their knowledge of the two kids and begin to track them.
Meanwhile Suzy and Sam hike through the woods, stopping sporadically for food and conversation. Suzy explains that she wanted to leave home because both she and her family were frustrated with her moods and behavior. Sam has had trouble making friends because of his oddness and shameless independence, and had a turbulent experience with his foster family before going to Camp Ivanhoe. They are finally discovered by the boys of Troop 55, who have all brought weapons. They attempt to attack and capture Sam, but there is a brief skirmish in which Suzy stabs one of the more aggressive scouts with her lucky left-handed scissors, and the camp dog, Snoopy, is accidentally shot through the neck with an arrow. The scouts flee the woods and report back to Sharp, Ward, and Suzy's parents to inform them of the pair's whereabouts. The injured scout is taken for medical treatment, and Suzy's father expresses his rage and frustration at Scoutmaster Ward, blaming him for letting one of "these beige lunatics" run away with his daughter. A veteran resident of the island (Bob Balaban) who had been Sam's former teacher (and also acts as the narrator for the film) interrupts the ruckus and suggests that they search a cove at the other side of the island, as Sam had expressed an interest in retracing a Native American migration route there.
Suzy and Sam set up camp at the cove in question, and bond more while swimming, dancing on the beach, and having their first kiss. Sam makes a pair of earrings for Suzy out of green beetles and fish hooks, which Suzy happily accepts, even allowing Sam to jab the hooks through her un-pierced earlobes. They talk more throughout the evening. Sam paints a picture of Suzy, and Suzy reads aloud from one of her books. They fall asleep content, but are awakened the next morning by Captain Sharp, Scoutmaster Ward, Suzy's parents, and Troop 55, who finally tracked them down.
Sam and Suzy are forcibly separated. Back home, Suzy treats her family with stoic hostility, as they have forbidden her from seeing Sam again. Sam is given a letter from his foster family, making it clear that he cannot return to live with them. Now homeless, Sam is temporarily taken in by Captain Sharp, who develops a bond with the intelligent young outsider. Sharp and Ward, who are sympathetic to Sam's situation, reluctantly speak to a representative of Social Services (Tilda Swinton), who informs them that due to Sam's history of troubling behavior, he will have to be placed in "juvenile refuge", where it is feared electro-shock therapy will be used on him.
Back at Camp Ivanhoe, Troop 55 has a collective change of heart, and the scouts feel guilty for their shabby treatment of Sam. Now knowing the sad details of Sam's past and his decidedly bleak future, they decide it is their duty to rescue him. They gather supplies and escape camp, sneaking into Suzy's house to spirit her away. They flee to Captain Sharp's home, an enthusiastic Suzy in tow, having left a homemade dummy in her bed as a decoy. They rescue Sam, who finally begins to trust his former enemies and is overjoyed to see Suzy again.
The next step of the escape plan is to make the trip to the Khaki Scouts Hullaballoo at Fort Lebanon staffed by Cousin Ben (Jason Schwartzman), a quirky older relative of a member of Troop 55. Sam and Suzy explain their situation to Cousin Ben, and that they are in love. Cousin Ben, having quasi-authority to do so, offers to preside over an impromptu wedding for the pair (which will have no legal standing, but would be of emotional significance). The "newlyweds" then board a sailboat and are about to make their escape with further help from Cousin Ben, but Suzy realizes she left her "magic" binoculars behind. Sam rushes back to get them, but is confronted by the scout whom Suzy had previously stabbed, who is recovering in the infirmary, and who taunts Sam with Suzy's binoculars. Sam finally cracks and attacks the scout, who promptly rats out the "fugitive Troop 55". Troop 55, Sam, and Suzy are chased off Hullaballoo premises as the predicted massive storm begins to brew overhead. Sam is struck by lightning during the chase, but recovers instantly.
Back at Fort Lebanon, Scoutmaster Ward has arrived in search of his missing troop. The high-ranking Commander Pierce (Harvey Keitel), in charge of the Hullaballoo, is outraged by Ward's supposed incompetence and strips him of his title. The camp prepares to evacuate to higher ground, as the storm is now in full swing. Before they can do so, the flood hits. Ward springs into action and rescues Commander Pierce, who was trapped in his headquarters at the time, and carrying Pierce on his back, shuttles everyone out of camp.
Back on the mainland, Troop 55, Ward, Pierce, Captain Sharp, Suzy's parents, and the Social Services representative (who had arrived that morning to collect Sam, who by then was again missing) crowd into St. Jack's church, which has been declared a storm rescue headquarters. Sam and Suzy are present, but hiding near the steeple. After much squabbling from the adults over the welfare of the children and Sam's future, Sam and Suzy are spotted and quickly escape to the roof.
Horrified, Captain Sharp scrambles for a solution. He knows Sam and Suzy are only being elusive because they expect to be separated again once they are found. He asks Social Services if Sam could be allowed to stay with him on the island, so as to be near Suzy, but the representative initially refuses because Sharp is not married. However, Suzy's parents, both lawyers, assure that there is no legal reason that should prevent the arrangement. Frantic, Sharp climbs to the roof, where Sam and Suzy are huddled by the steeple in pouring rain and raging wind. They are preparing to jump into the flood below, but Sharp pleads with Sam to consider the offer of a new home on the island. Sam consents, but before the three can climb down to safety, the steeple is struck by lightning and severed, leaving the three dangling precariously over the raging waters. Miraculously, they survive by hanging on to each other as they dangle from the church eaves.
Some time later, Suzy is safe at home again. Sam makes daily visits to her house, though it is unclear whether Suzy's parents permit this, since Sam enters and leaves through an upstairs window. He lives happily with Captain Sharp, who is grooming him to be a future member of island police. Things at Camp Ivanhoe are looking up. Scoutmaster Ward has his job back, is in a relationship with the pretty switchboard operator from the police station, and is welcoming new recruits into Troop 55.
The film closes with a close-up of a painting Sam has done of the cove where he and Suzy stayed during their adventure. While they camped there, they decided they did not like the name of the island and planned to think up a new one. We do not see the name they chose until Sam's painting reveals it: Moonrise Kingdom, spelled out with rocks on the beach of the cove.
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