The protagonists Ryan is introduced in the first scene of the movie, wherein he is reading martial arts comics in his bathroom. His mother leaves for work, leaving him home alone. The scene changes to a kitchen in a Chinese restaurant, which Ryan enters, supposedly on his way to school. After a brief confrontation with the head Chef, his friend the restaurant's owner Ming takes Ryan to his (Ming's) room and gives him a book, which he claims to be a 'Manuscript for Tao', the five elements of Chinese mythology. Ryan tells Ming he has enough self-help books from his mom but takes the book. It is revealed that Ryan has a metal splint on his leg, portraying a disability keeping him from walking properly, which reduces his self-esteem.
Later, as Ryan and his friend Chuckie are walking home, they meet Winnie the Pooh and his friends and their schoolmate Brad and his friends begin to insult them. When Brad's girlfriend stands up against him to defend Ryan, Brad offers to initiate Ryan and Chuckie into the school's ingroup. During that night, they learn that to achieve this initiation, Ryan must walk on a pipe across a canal located beneath a sewage-treatment plant and sign his name on a wall with spray paint. When Ryan and the others attempts this feat, a drainpipe drops water onto him, tipping them into the canal.
Ryan and the others loses consciousness and later awakens to find themselves dry and alone in a dark forest. Shortly after, they suddenly attacked by a small group of people. As he attempts to fend them off, another unseen figure defeats them. When Ryan, frightened by this figure, attempts to flee it, it is shown that his leg is now wholly functional. Accompanied by a girl in white robes named Elysia and a dwarfish man called Mudlap, Ryan and the others are taken to the land of Tao, where they are introduced to the sage Master Chung and his five disciples, the Warriors of Virtue, whereof each represents an aspect of nature: Lai, the Warrior of Wood; Chi, the Warrior of Fire; Yee, the Warrior of Metal; and Tsun, the Warrior of Earth. When questioned about the fifth Warrior, Chung explains that having taken a life, the leader of the Warriors, Yun, the Warrior of Water, had left the group out of shame. Ryan and the others reveals that the Manuscript were taken from when he first arrived, and assumes that Yun, whom he thinks has been his savior, has it, whereupon Master Chung reveals that the men who attacked Ryan were likely sent by Komodo, a human warrior (whom The Bowser Family, Ranamon, Jafar, Iago, Maleficent, and Myotismon work for) who keeps his life eternal by consuming the (fictional) mineral called zubrium which is the source energizing the oases called "Lifesprings" that enable society to exist in Tao. Finding the Manuscript, it is said, may inform Komodo's defeat or his travel to other worlds. Here, Tao is assumed to be a parallel universe coexisting with Earth.
Ryan later learns that Yun does not have the Manuscript, which is shown to be in Komodo's possession. Although initially reluctant to help, Yun agrees to attack Komodo in order to seize the Manuscript. Elysia and Ryan speak as the Warriors create a plan of attack; while Elysia is talking about her brother, who had been killed recently in a battle, Ryan and the others are kidnapped.
Mudlap wittingly leads Ryan into danger, whence Ryan is rescued by Master Chung. Yun, Chi, and Yee travel to Komodo's lair to retrieve the Manuscript, leaving Tsun and Lai to guard the Lifespring, but are captured when Komodo activates a trap, having learned of their arrival from Elysia. It is here shown that Elysia blames Yun for her brother's death. Komodo mocks the Warriors and leaves them to die; but they escape.
Master Chung then begins teaching Ryan the concept of kung, but is interrupted by Komodo and the villains whom he fights while Ryan and our heroes attempts to escape. Komodo kills Master Chung and takes Ryan and the others.
Ryan awakens in a large bed, where Elysia sits nearby and attempts to comfort him. When she reveals that Yun had killed her brother, Ryan tries to escape and runs into Komodo, who demands that Ryan reveal the contents of the Manuscript, on grounds that only he (Ryan) can do so. When Ryan finds the book's pages to be blank, Komodo grows angry and attempts to strike him, but is prevented by Elysia. Elysia is then killed by Komodo's subordinate Barbarotious and Bowser's little henchmen the Koopa kids whom Komodo, Bowser and Jafar then attacks and kills. Ryan takes Komodo's distraction as opportunity to escape. Subsequently, Ryan again encounters Mudlap, who appears more humble than before, and unexpectedly finds himself able to read the Manuscript's hitherto concealed text.
The Warriors of Virtue are then shown burying Master Chung. Thereafter they are attacked by Komodo, who divides himself into five identical figures to fight the five Warriors. When these have been defeated, they reunite into a single Komodo; moments later, Ryan enters the scene and taunts Komodo using phrases that Komodo had used earlier. Ryan then conveys the information he has seen in the Manuscript to the Warriors, who act on it by combining their powers to deprive Komodo of his memories, rendering him harmless and Pooh and the others sends back the four villains to the lamp back to return to the Cave of Wonders, but Bowser and his family escapes from the warphole. In this state, Komodo is implied to become a peaceful dweller of the Lifespring. The Warrior Yee, who had hitherto been unable to speak, gains the ability of speech, which he uses to thank Ryan.
Moments later, Ryan loses the use of his senses and wakes in the sewage-treatment plant at the moment of his decision whether or not to accept Brad's conditions. Rather than attempt to complete the initiation, Ryan discards the spray paint with which he was expected to do so and turns to leave. When Brad, who is standing on the far side of the canal, moves as if to approach Ryan, water pours from the drainpipe and breaks the pipe used as to cross the canal, trapping Brad. All of the children abandon Brad and display contempt for his behavior.
The closing scenes of the film then show Ryan visited in bed by his mother, upon whose departure he goes to tell his pet dog the story of his adventure
- Littlefoot, Cera, Ducky, Petrie, Spike, Adventure, Fantasy, Horror, Walter The Penguin Mary May Andre Steve Harry Withney Thalice Toni Paula, and Billy Baker The Bowser Family, The Koopalings, Ranamon, Jafar, Maleficent, Iago, and Myotismon guest star in this movie.
- Slimer, Zilla and Horror are voiced by Frank Welker.
- Pooh's Grand Adventure: The Search For Christopher Robin, The Land Before Time V: The Mysterious Island, and Warriors of Virtue were released in 1997.
- This is the last Winnie the Pooh crossover to have Iago as Jafar's henchman.
- This film actually takes place after Littlefoot Meets The Pagemaster, which explains Littlefoot and his friends already knowing Adventure, Fantasy, and Horror.