The film starts with the narrator, a swallow named Jaquimo, flying through Paris, France and telling the audience about the story of Thumbelina. Winnie the Pooh and his freinds (along with Danny and Sawyer) meet a lonely woman (an old friend of Sawyer) who longs for a child of her very own. One day, a good witch gives her a barley corn to plant, and the next day the flower blooms, revealing a little girl "no bigger than her thumb". The woman names her Thumbelina. Thumbelina spends time with her mother's farm animals and Pooh and pals, but is worried that there is no one around of her own size. One night, her mother tells her a story about fairies. After being put to bed, Thumbelina imagines that someday she will be able to find someone to love. As she is humming to herself, Prince Cornelius of the Fairies flies by her windowsill and is enchanted by her. The two take a ride on Cornelius' bumblebee, during which they fall in love. During this ride, a toad named Grundel sees Thumbelina and declares to his mother, Mrs. Toad, that he loves her.
Cornelius returns Thumbelina to her windowsill and promises to come back for her the next day. After he leaves, Thumbelina goes to sleep in her walnut bed, and is kidnapped along with Pooh, Tigger, and Danny by Mrs. Toad despite Hero the dog's attempt to stop her. When Thumbelina and the three friends awake the next morning, they are on a lily-pad far away from home. Mrs. Toad declares that Thumbelina will join their family singing troupe "Singers de Espana', and Thumbelina will also marry Grundel. The group leaves her alone on the lily-pad to fetch the priest, despite her protests. The four friends cry for help are heard by Jacquimo, who helps them free of the lily-pad and encourages them to follow their heart and find her way home to her mother and their friends. Jacquimo himself promises to find Cornelius and the others, who lives in the Vale of the Fairies and is a friend of Jacquimo's. Meanwhile, Cornelius has learned of the four friends' kidnapping from Hero and goes to find them with Piglet, Rabbit, Eeyore, and Sawyer following them.
Thumbelina and the three friends almost reaches home, but she is stopped by Berkeley Beetle, who becomes smitten with her and wants her to join his act at the Beetle Ball. Thumbelina is forced to perform at the Beetle Ball, but at the end is kicked out for being "too ugly". Grundel, who is also searching for Thumbelina, tracks down Beetle and forces him (by taking his wings) to help find Thumbelina. Searching for the Vale of the Fairies, Jacquimo seeks help from a fleeing rabbit and its pursuer, a fox. The fox angrily shoves him out of the way and a strong gust of wind blows Jacquimo into a tree, driving a thorn straight through his wing and wounding him severely. When the cold winter frost arrives, he becomes too weak to fly to the point that he loses consciousness and falls to the ground. The falling snow also causes Cornelius to fall from his Bumble into a pond, where he is frozen in ice. Beetle eventually finds Cornelius and cuts out a block of ice in which he is trapped, and takes him to Grundel.
With both Cornelius and Jacquimo incapacitated, Thumbelina and the three friends take shelter from the winter frost in a shoe. They are rescued by Miss Fieldmouse, who tells them that she has heard that Cornelius friends are dead. Miss Fieldmouse convinces a heartbroken Thumbelina to join her to visit Mr. Mole, where Thumbelina is asked to sing for him. They take a walk in Mr. Mole's extensive tunnels, where Thumbelina discovers the unconscious Jacquimo. Mr. Mole also tells Miss Fieldmouse, in private, that he would like to marry Thumbelina, and she agrees to convince Thumbelina that it would be for the best. Grundel learns that Thumbelina is to marry Mr. Mole and abandons the frozen Cornelius with Beetle, allowing three young jitterbug children that Thumbelina befriended to light a fire to melt the ice that has trapped Cornelius. Thumbelina sneaks out of Miss Fieldmouse's home to visit Jacquimo. He wakes, and Thumbelina removes the thorn from his wing. Though she explains that Cornelius and the others are dead, Jacquimo refuses to believe it, and ventures off to find them and the Vale of the Fairies.
When Thumbelina is prompted by the minister at the wedding ceremony, she responds that she cannot marry Mr. Mole, since she does not love him. Grundel and Beetle crash the ceremony, which results in a chase throughout Mr. Mole's caverns. However, Cornelius and the jitterbug children arrive to stop them and Cornelius engages Grundel. Despite his efforts in stalling the crowd long enough to secure Thumbelina's escape, Cornelius is unable to defeat Grundel and the battle eventually culminates in the two falling into a bottomless pit. Thumbelina manages to scare her pursuers by causing a mountain of jewelry to slide toward them, and she escapes to the surface, where she is found by Jacquimo, who claims to have found the Vale of the Fairies. They fly there, but Thumbelina remains skeptical due to the winter having covered the Vale. At Jacquimo's urging, Thumbelina sings, and the ice thaws and Cornelius, who survived the fall and is still with the jitterbug children, appears to be reunited with his love. Pooh, Tigger, and Danny reunited with their friends. Cornelius proposes, Thumbelina accepts, the pair kiss and wings sprout from Thumbelina's back. The wedding is celebrated with Thumbelina's mother, Jacquimo, the jitterbug children, Pooh and the others, and Cornelius' family in attendance. In the credits, Grundel is revealed to survive the fall with a broken leg and marries a female toad.
- Danny and Sawyer guest star in this film.
- This is a PAL film with PAL bits from Pooh's Grand Adventure: The Search For Christopher Robin, andPiglet's Big Movie and NTSC bits from The Many Adventures of Winnie the Pooh, The Tigger Movie, Winnie the Pooh: A Very Merry Pooh Year, Pooh's Heffalump Movie, and Cats Don't Dance.
- Both Thumbelina and Cats Don't Dance were released by Warner Bros.