A convertible toy wagon includes a plastic body with side walls that define a passenger space and a bottom portion that defines a storage compartment. Horizontal seating surfaces are located fore and aft of the opening of the storage compartment. Seatbacks are pivotally attached to the wagon body and close to cover the horizontal seating surfaces and the storage compartment. A handle is pivotally attached to the front of the wagon body by a handle bracket that includes a pair of arms and an arcuate locking surface positioned therebetween. A ridge is formed on a cylindrical lower portion of the handle and interacts with the locking surface of the handle bracket so that the handle may be locked into an upright position.