In Brazil, various exotic birds are smuggled out of the country. In Moose Lake, Minnesota, a crate with a male Spix's macaw hatchling falls out of a truck and is found by a little girl named Linda Gunderson, who names him Blu. Over the next 15 years,[7] Linda comes to own a bookstore. Highly tame and unable to fly because he is scared to, Blu is ridiculed frequently by the Canada geese that come by outside of Linda's bookstore.
One day, ornithologist Túlio Monteiro invites Blu and Linda to Rio de Janeiro because Blu, who is the last known male of his species, needs to mate with the last known female macaw. Linda initially refuses, but later accepts and they fly to Rio. At Túlio's aviary, Blu meets Jewel, a fiercely independent Spix's macaw female longing to flee back to the wilderness. The macaws are captured by Fernando, an orphaned boy, and a sulphur-crested cockatoo named Nigel, both of whom work for a group of smugglers led by Marcel, who wants to leave the country as soon as possible to secure a black market deal regarding Blu and Jewel.
While Fernando has second thoughts about his actions, Nigel tells the macaws that he desires to exact revenge on "pretty birds" after a parakeet stole his role on a television show. However, because of Blu's familiarity with cages, they are able to escape and flee into the jungle. Fernando meets Linda and Túlio and helps them find the birds, while Blu and Jewel meet Rafael, a toco toucan, who offers to take them to his bulldog friend, Luiz, to remove their leg chain.
He attempts to teach Blu how to fly, before they meet up with a red-crested cardinal named Pedro and his yellow canary friend Nico. Meanwhile, Nigel coerces a horde of thieving marmosets led by Mauro to capture Blu and Jewel. Pedro and Nico then take the macaws to a Rio-style dance party, where they dance together and begin to fall in love, until the marmosets crashes the party. The birds fight them off while the five escape on a tram.
Fernando takes Linda and Túlio to the smugglers' hideout, where they discover the birds have already been moved out and that the smugglers are planning to use the Rio Carnival parade to take the birds to the airport, as the other streets have been blocked off for the festivities. Meanwhile, Blu and the others meet Luiz, who releases the chain holding Blu and Jewel. After the two get into a heated argument, they decide to go their separate ways.
Pedro and Nico then witness Nigel capturing Jewel. When Blu and Rafael learn of it, they rush to the carnival to rescue her. Meanwhile, Linda and Túlio have spotted the smugglers' parade float and organize a rescue attempt for the birds. As Linda and Túlio pose as dancers in Spix's macaw costumes, Nigel captures Blu and the group. Linda and Túlio are unable to stop the smugglers in time as they takes off in a Short SC.7 Skyvan.
During the flight, Blu breaks out his cage using a fire extinguisher and releases the other captive birds. However, Nigel attacks the macaws, injuring Jewel's wing in the process. Blu sends Nigel flying into one of the plane's propellers with the fire extinguisher, causing the plane to fall. The smugglers flee the plane while Jewel falls out of the open cargo hatch towards the ocean. Jumping out of the plane to rescue her, Blu finally discovers that he is able to fly as he and Jewel kiss, and he carries her to Linda and Túlio for help.
Later, Linda and Túlio adopt Fernando and live in the jungle to help protect it. Blu and Jewel eventually raise three chicks together, and celebrate with Rafael, Nico, Pedro, Linda, Luiz, and Túlio. Meanwhile, Nigel survives the plane crash but is ridiculed for his loss of feathers by Mauro, and the smugglers are sent to prison.

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