Wally the Great (Tony Harvey), great-grandson of Waldo the Magnificent, is an amateur magician whose dream is to win the competition at the Magic Club for Best Magician. He is confronted with a rival, Roland the Remarkable (Dale Burridge), who believes Wally is a nobody. Meanwhile, children’s entertainers The Wiggles, consisting of lead singer Greg Page, guitarist Murray Cook, drummer Anthony Field and keyboardist Jeff Fatt, are performing at a nearby school for Dorothy the Dinosaur’s birthday. Mrs. Bingle (Joanne Samuel), the principal, had an accident with Anthony after she blew a whistle, causing him to act extremely silly. Wally, watching from behind a wall, sees Dorothy herself laying Greg’s (who is a magician) wand on a table while sulking that everyone has forgotten her birthday but really they were trying to keep the surprise party for her a secret. Wally quickly snatches it but is caught by Dorothy. The two have a tug of war and the wand breaks in half. Meanwhile, the Wiggles decide to go out looking for Dorothy in their Big Red Car.
After seeing Henry the Octopus and his Underwater Big Band, they happen upon Brrrrrrrrrr Street where they get frozen; since they have no luck finding Dorothy, they go to Wigglehouse. Meanwhile, the wand is broken to bits after an accident with Wags the Dog and his pups. During the adventures that Wally and Dorothy have, their friendship grows more and more. When they visit Captain Feathersword the Friendly Pirate, a crew member falls in the water and Wally saves him and is rewarded a medal with a mini feathersword planted on it. Dorothy leaves and sits on a bench, sadly, complaining to Wally that nobody remembers her birthday. Wally then says “I didn’t forget your birthday” which makes Dorothy a little bit better. Wally begins to daydream about his grandfather, Waldo, saying to him to believe in himself. Wally forgets all about the Magic Competition and is almost late, but thanks to Dorothy, he makes it. Jimbo the Juggler blocks their way and say that Wally should put his vehicle in the full car park, but Wally thinks quick and says “You find a spot” and tosses his helmet at him, leaving Jimbo pinch-faced. He then signs in and runs into Roland, who clearly amuses the judges when his score is 9–9–9.
Wally find his grandfather’s old chest of magic supplies and grows confident in himself. Meanwhile, the Wiggles are waiting for Dorothy to come to the party but nobody shows up. After Wally does his magic act, the judges score him 10–9–9. He wins the competition which leaves Roland jealous but at the same time impressed. Wally takes Dorothy to her party when it is just about to be cancelled and the party begins. Dorothy is proud that she has found a new friend and that her friends have remembered her birthday.