For over fifty years, the tiny keeper of the dam had watched over it and recently had begun to worry about its state. He shows his daughter the different cracks that have formed over the dam's surface, and though the girl shows no concern, her father is deeply worried that, come spring, newly melted snow will cause the dam to break and flood the meadow where the little people lived in flowers. The keeper sends his daughter to warn the little people's prince.
After a long day of walking, the young girl falls asleep inside of a tulip. As she sleeps, an old medicine woman discovers her and takes the tulip to town. She sells the tulip to a lonely, child-less woman, promising that it will open to reveal a child. The child-less woman agrees and is delighted to find a beautiful girl smaller than her thumb, whom she names "Thumbelina". When Thumbelina awakes, she tries to explain that she is on a quest to find the prince of the little people, but the woman doesn't listen.
At the end of her first day in her new home, Thumbelina goes to bed feeling lost hopeless. Shortly after she falls asleep, a frog captures Thumbelina and takes her away to her lily pad to marry the frog's son. Thumbelina escapes with the help of two fish, who cut the pad's roots and set it free. Downstream, Thumbelina befriends a swallow. The bird listens to her story but is unable to help, as he himself has lost his flock and needs to find it before the winter. Thumbelina then meets a butterfly who offers to take her to the meadow. However, a beetle snatches Thumbelina away before she can leave. After being ridiculed by his friends about his ugly new "pet", the beetle leaves the lost Thumbelina on her own once again.
Thumbelina manages to make herself a home for the winter with the help of the large Big Bear, who brings her honey and protects her from dangerous animals. After Big Bear's brothers arrive and the three bears make their way to their cave to sleep during the long winter. Starving, Thumbelina searches for food and eventually finds the home of the old mouse Mona, who takes Thumbelina into her home for the remainder of winter. In exchange, Thumbelina helps Mona with the housework and cooking. Unbeknownst to Thumbelina, Mona has sold Thumbelina to the ugly Mr. Mole in exchange for food. When Mr. Mole arrives, Mona tells Thumbelina that if she marries him, Mr. Mole will take her to the meadow of the tulips. Seeing no other option, Thumbelina accepts. Mr. Mole shows Thumbelina what will become her new home, a dark tunnel under the soil. There, Thumbelina is shocked to find the dead body of her friend the swallow. At night, Thumbelina brings the swallow a blanket. To her surprise, the swallow opens his eyes and is glad to see the girl once again. Thumbelina nurses the swallow back to health as spring and her wedding date draw closer. The swallow offers to fly Thumbelina away, but she refuses feeling that she cannot betray Mona, who had been so kind to her when she had nearly frozen to death.
On the day of her wedding, Thumbelina is heartbroken when she realizes that she has failed at the important task given to her by her father and fears for the lives of all of the little people. The swallow, who had left once he had recovered, returns to Thumbelina with the news that he has found the meadow of the tulips. Thumbelina discovers Mona's wicked plan. Feeling cheated, Thumbelina climbs on the back of the swallow and flies off to get the prince. Thumbelina, the prince and his men, riding upon the swallow and his newly found flock, arrive at the dam where Thumbelina's father waits desperately. Delighted to see his daughter again, the keeper of the dam embraces her and watches as the soldiers fix the dam's cracks. Once the meadow of the tulips is safe, the prince proposes marriage to Thumbelina. Thumbelina accepts and becomes the princess of the land to the cheers of the little people.