A peddler sets up shop in the fictional sultanate of Agrabah, offering to tell the audience about the story of an oil lamp in his possession. Jafar, the Grand Vizier of the Sultan, and his parrot Iago, seek the lamp hidden within the Cave of Wonders but is told that only a “diamond in the rough” may enter. Jafar identifies a street urchin named Aladdin as worthy. Aladdin and his pet monkey Abu cross paths with Princess Jasmine, who has run away from the palace, unwilling to be betrothed to another snobbish suitor. Aladdin and Jasmine become friends and fall in love, but Jafar has Aladdin apprehended, tricking Jasmine into thinking that he was decapitated.
Disguised as an old man, Jafar frees Aladdin and Abu, taking them to the Cave and promises to reward them if they retrieve the lamp. Inside, Aladdin befriends a magic carpet. Abu greedily tries to steal a jewel, despite the Cave’s request, and it collapses. Trapped in the Cave, Aladdin rubs the lamp, releasing the Genie trapped inside, who explains Aladdin has become his master and will grant him three wishes. Aladdin tricks the Genie into freeing them from the Cave without wasting a wish, and then uses his first to become a prince to be near Jasmine. Jafar, on Iago’s suggestion, plots to become Sultan by marrying Jasmine, but Aladdin parades into the city as “Prince Ali of Ababwa”. However, Jasmine is unimpressed with Aladdin’s bravado.
Despite his friends advising him to tell Jasmine the truth, Aladdin refuses, believing she would never fall “for some street rat”. He takes Jasmine on a worldwide flight on the carpet, where she deduces his identity, though Aladdin says that he dresses as a peasant to escape the stresses of royal life, which convinces her. Aladdin returns Jasmine home, only to be attacked by the palace guards on Jafar’s orders and nearly drowned, until the Genie rescues him using his second wish. Jafar tries to hypnotize the Sultan into agreeing to his marriage to Jasmine, only for Aladdin to appear and expose Jafar’s schemes. Jafar flees, but notices Aladdin has the lamp, realizing who he is.
Learning he will become Sultan, Aladdin has second thoughts about freeing the Genie, believing that without him, he would not be able to keep up appearances. Iago steals the lamp, and Jafar becomes the Genie’s new master. He uses his first two wishes to usurp the Sultan and become the world’s most powerful sorcerer, exposing Aladdin’s lies and exiles him, Abu, and the carpet to a frozen wasteland, though they escape death and return to the palace. Jafar orders the Genie to brainwash Jasmine into falling in love with him, but the Genie reveals he is unable to grant the wish. Jasmine feigns interest to distract Jafar and allow Aladdin to get the lamp, but he is cornered.
Jafar transforms himself into a giant cobra and ensnares Aladdin, saying he is the most powerful being in the world. However, Aladdin points out the Genie is more powerful, inspiring Jafar to use his last wish to become a genie, only to be sucked into his own lamp as part of the genie’s nature, dragging Iago in with him. The Genie throws Jafar’s lamp into the Cave of Wonders, and asks Aladdin to use his third wish to regain his royal title. However, Aladdin decides to free the Genie. Learning of Aladdin and Jasmine’s love, the Sultan alters the law to allow his daughter to marry whom she chooses. The Genie leaves to explore the world, while Aladdin and Jasmine celebrate their engagement.