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Kuzco is the selfish teenage emperor of the Incan Empire, who summons Pacha, the leader of a nearby village, to inform him that he is planning to build his enormous summer home, Kuzcotopia, on the site of Pacha's house for his 18th birthday, thus rendering Pacha and his
Groove
family homeless via eminent domain. Pacha, along with Hubie, Marina, Rocko, Petra, Beanie, Timmy, Pikatwo, Bonkers, Fawn and Buck attempt to protest, but are dismissed.

Kuzco's recently fired advisor Yzma, furious after having been sacked, enlists her guileless right-hand man Kronk along with 009 Domino (The Black Tulip) to try and poison Kuzco so that Yzma can take control of the empire, but the supposed poison turns out to be a potion, which turns Kuzco into a llama rather than killing him.

After knocking Kuzco unconscious, Yzma orders Kronk to dispose of him, but conscience-stricken Kronk loses the sack holding Kuzco and it falls into Pacha's cart. Kuzco ends up in Pacha's village (he later stops the show to remind the audience that this is his story, not Pacha's), accuses Pacha, Hubie and his friends of kidnapping him and demands them to help him return to the palace, but Pacha refuses unless Kuzco builds his summer home elsewhere, and Kuzco attempts to find his own way home in a jungle, where he accidentally gets surrounded by a pack of black panthers, only to be saved by Pacha, Hubie and his friends until they get tied to a huge log by a vine and float out of control down a river and go over a waterfall. Kuzco then falls unconscious again and Pacha gets him up by nearly giving him mouth-to-mouth resuscitation, much to everyone's disgust. They then camp there for the night.

Meanwhile, Yzma assumes command of the empire, but when Kronk reluctantly reveals he never killed Kuzco, the two head out with Domino and begin to search the local villages for him.

Kuzco lies to Pacha, Hubie and his friends about agreeing to build his home elsewhere, and Pacha agrees to take him back to the palace by crossing a bridge. After the bridge breaks slightly, Pacha almost falls in the river. Hubie and his friends struggle to help Pacha and Kuzco admits that he lied, followed by Kuzco, Hubie and his friends almost falling in as well. Pacha and Kuzco fight, despite Buck trying to break them up, break the bridge completely, and are forced to work together to escape falling in the river and being eaten by crocodiles, and agree to take a longer way to the palace.

The group stop at a roadside diner, Mudka's Meat Hut, where Yzma and Kronk arrive shortly after. Pacha and Hubie overhear Yzma and Domino discussing their plans to kill Kuzco, and attempt to warn him and the others throughout the commotion in the diner.Kuzco does not believe them, but Marina and the others do, saying that Hubie has only lied once in his life and never likes to lie.

Kuzco says they are selfish and tells them to go, and returns to Yzma, only to overhear them discussing that they are seeking to kill him and that the kingdom does not even miss him. Kuzco realizes Pacha and Hubie were right, but to his shame, they have already left.

Later that night, at Yzma and Kronk's camp spot, Kronk then suddenly realizes that Pacha is the guy who had Kuzco in his cart, and tells Yzma that if they find him at his village, they would find Kuzco. After a repentant Kuzco spends the night alone in the jungle, to his surprise he finds and rejoins Pacha, Hubie, Marina and their friends in a llama field, with them having forgiven Kuzco. They all race back to the palace, with Yzma, Kronk and Domino chasing them, although temporarily impeded to their frustration by Pacha's family, until the pursuers get hit by lightning and fall into a chasm.

Kuzco, Pacha, Hubie and their friends arrive at Yzma's laboratory only to find that their pursuers somehow got there first (neither Kronk, Yzma nor Domino are themselves quite sure how). Yzma and Domino order Kronk to kill Kuzco and Hubie, but Kronk refuses to do so, and ends up changing sides after a vicious tongue-lashing from Yzma (who insults his cooking) and Kronk gets dropped down a trapdoor. Kuzco admits that his behavior in the past was wrong, but questions Yzma if murder is really the answer. Domino reveals to Hubie and his friends that Yzma had given her a potion to remember the incident at Mt. Quena and now wants revenge on Hubie and his friends.

Yzma summons the palace guards, forcing Kuzco, Pacha, Hubie and his friends to grab all of the transformation potions and flee. After trying several formulas that convert Kuzco to other animals, some which help them in certain places, and then back to a llama, they escape the guards (but not Yzma and Domino), who foolishly try to follow them down a drain, and the team find they are down to only two vials. Yzma and Domino catches up to them and accidentally steps on one of the two, turning herself into a tiny, squeaky-voiced kitten. She still almost manages to obtain the antidote after fighting the team for it, but both her and Domino are thwarted by the sudden reappearance of Kronk, who questions why the trapdoor led him outside. Kuzco becomes human again and sets out to redeem himself, building a small summer cabin on the hill next to Pacha's home at the peasant's invitation, both Kuzco and Pacha's family sharing a swimming hole, with Hubie, Marina and their friends joining them, realising they need a vacation.

Meanwhile, outdoorsman Kronk as a scout leader with the squirrel that Kuzco came across earlier teaches Yzma (now stuck as a kitten) to be a member of the troop with the children.

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