In 1939, Danny, an optimistic young cat, dreams of Hollywood stardom, so he travels from his hometown of Kokomo, Indiana to Hollywood in hopes of starting a career there. After meeting a new friend Pudge, along with Skunk and friends Danny is selected by agent Farley Wink to feature in a film called Li'l Ark Angel that is in production alongside a white cat named Sawyer at Mammoth Studios. Upon joining fellow animals; Tillie, Cranston, Frances, and T.W., Danny is dismayed on learning how minor his role is and tries to weasel his way into more time in the spotlight. Danny winds up angering Darla Dimple, a popular, extremely spoiled child actress and star of the film, (whom Baboon is working for) so she assigns her butler Max to intimidate Danny into no longer, trying to enlarge his part.
Rabbit states that animals just get taken for granite in Hollywood and Danny learns from the studio's mascot Woolie, that human actors are normally given more important roles than animals; a fact that none of them are very happy with but know they must accept. He longs for the spotlight and tries to make a plan that will encourage humans to provide animal actors with better scenarios, such as by assembling a massive cluster of animals and putting on a musical performance for the humans.
Later, Danny is given advice by Darla (while masking her true villainous nature with a sweet one as she always does) through song on how to interest and satisfy audiences. He takes this information to heart and groups the animals for an audition on the Ark in hopes of attracting the humans' attention. However, Darla, fearing that the animals are jeopardizing her spotlight, has Max help her flood the stage, while L.B. Mammoth, the chief of Mammoth Studios; and Flanagan, the film's director, are giving an interview, gets the animals blamed and fired for the collateral damage. The animals are depressed at being barred from acting in Mammoth Studios (especially Danny, who was convinced by Darla that she was trying to help the animals). As Woolie tells Danny to return to Kokomo, Tillie suggests Sawyer to follow Danny.
After a comment from the bus driver and seeing Pudge wander the streets, Danny comes up with a plan yet again. He secretly invites Sawyer, her friends, and Woolie to the premiere of Lil' Ark Angel. After the screening and a battle with Max that sends him flying away on a Darla Dimple balloon, Danny calls the audience's attention. Upon bringing Sawyer, Woolie, Tillie, Cranston, Pudge, Frances and T.W. backstage to help Danny, the eight animals put on a musical performance that entertains and impresses the viewers. Meanwhile, Darla is trying to sabotage the show by tampering with the set and special effects equipment, but her attempts instead cause her to inadvertently enhance the performance as well as injure herself. At last, she pulls a big all-switch, though it sets off an enormous fireworks finale, making the animals' performance a complete success (as well as severing the roof of the theatre).
Furious and fuming at the animals, Darla berates Danny, accidentally confessing to flooding Mammoth Studios when her voice is amplified over the theater's sound system thanks to an open microphone, revealing the truth about the incident to the audience, including L.B. Mammoth and Flanagan, who are horrified seeing Darla for her true colors. Pudge pulls a lever, sending Darla down a trapdoor. At last, the animals' demand for larger roles are met and their dreams are fulfilled after so long, and Danny and Sawyer admit their feelings for each other. (Max is also last seen in Paris, France on the balloon.)
A montage of film poster parodies which put the main animals in the roles of each character (ending with a Free Willy parody) precede the credits. It is shown afterwards that Darla is fired from show business and is now working as a janitor. She puts up a "The End" poster on a wall, and it falls down and wraps around her.