Kuzco is the young, selfish, and overly-pampered emperor of the Inca Empire who lives the high-life and routinely punishes those who displease him, such as having an elderly man defenestrated for the crime of “throwing off his groove”. When he fires his conniving adviser Yzma for attempting to run the country behind his back, she, along with her muscular but clumsy and oafish henchman Kronk, plots to take the throne. Kuzco meets with Pacha, a kind peasant and village leader, and tells him that he plans to demolish his hilltop family home to build himself a lavish summer home called “Kuzcotopia”. Pacha protests, but is quickly dismissed. That evening, Yzma hosts a dinner where she plans to poison Kuzco, but due to a mislabeled vial, Kronk inadvertently spikes Kuzco’s wine with the wrong potion, turning him into a llama instead. After knocking Kuzco out, Yzma orders Kronk to dispose of him in a river. However, after doing so, Kronk has a crisis of conscience at the last second and saves Kuzco, but misplaces him on a cart belonging to Pacha.
Upon returning home, Pacha does not tell his family about Kuzco’s decision. After awakening from the bag on the cart and scaring Pacha, Kuzco blames Pacha for his transformation and orders Pacha to return him to the palace. Pacha agrees, but only if Kuzco agrees to build Kuzcotopia elsewhere. Kuzco refuses the offer and decides to go by himself against Pacha’s warnings, but quickly ends up getting chased through the jungle by a pack of black jaguars. Pacha arrives to rescue him, and extends his offer a second time, to which Kuzco seemingly accepts. The two survive many ordeals in the jungle, and Pacha finds that Kuzco has a good side to him underneath his selfishness. Meanwhile, Yzma takes the throne, but is angered to learn from Kronk that Kuzco is still alive, so the two set out to find him. In the jungle, Kronk takes directions from Bucky, a squirrel with whom Kuzco had an unpleasant encounter while walking through the jungle alone.
The next day, the pairs arrive at a jungle diner at the same time, unaware of each other’s presence. While Kuzco complains to the cook, Pacha overhears Yzma’s plan and attempts to warn Kuzco when he returns, but he doesn’t believe Pacha, thinking he is beloved by his people, and reveals that he intended to renege on his promise to spare Pacha’s home. However, Kuzco soon overhears Yzma’s and Kronk’s plot of attempting to kill him and learns that no one in his kingdom misses him due to his selfishness. Feeling guilty and unwanted, Kuzco leaves the diner on his own, planning on living out the rest of his life as a normal llama. Pacha catches up, still willing to help Kuzco return to normal after knowing his life is in danger. Kuzco reconciles with him before they set off to Pacha’s house for supplies.
Upon arriving, Yzma is already there, searching for the two. Pacha has his family delay Yzma, giving him and Kuzco a head-start back to the palace, intending to enter Yzma’s lab and find a potion to reverse the effects of the llama potion. However, they are ambushed by Yzma and Kronk, who somehow made it back ahead of Kuzco and Pacha. Yzma then orders Kronk to kill the duo. When Kronk hesitates, Yzma insults him by revealing that his spinach puffs disgust her, hurting his feelings and prompting him to betray her, but she drops him down a trapdoor. She then summons the palace guards and claims that Pacha and Kuzco murdered the emperor, forcing them to flee with an armful of vials containing various animal potions (Yzma deliberately knocked them all to the floor so that Kuzco and Pacha could not tell which one is correct), which they use to transform Kuzco during the chase. Pacha also knocks a table of flasks containing other animal potions into the pursuing guards, turning them into various animals. As they are cornered on the ledges of a giant wall structure, they are left with two remaining vials. Yzma and Kuzco struggle over the vials, accidentally crushing one and transforming Yzma into a small kitten. Pacha and Kuzco use teamwork to reach the other vial. Yzma snatches it, but as she gloats over her victory, she is abruptly and inadvertently crushed by a secret exit opened by Kronk (who has found his way out of the trapdoor passage), dropping the vial directly into Pacha’s hand. Pacha gives Kuzco the vial, and Kuzco, after expressing his gratitude to Pacha, drinks the potion.
Some time later, a restored Kuzco, having reflected on the consequences of his selfishness and made amends, takes Pacha’s suggestion of moving Kuzcotopia over to a neighboring and unoccupied hill. Kuzco then joins Pacha and his family at his modest and smaller resort while elsewhere, Kronk has become a scoutleader and trains a new batch of scouts, including Yzma, who is still a kitten.