This retelling of the old Chinese folktale is about the story of a young Chinese maiden who learns that her weakened and lame father is to be called up into the army in order to fight the invading Huns. Knowing that he would never survive the rigours of war in his state, she decides to disguise herself and join in his place. Unknown to her, her ancestors are aware of this and to prevent it, they order a tiny disgraced dragon, Mushu to join her in order to force her to abandon her plan. He agrees, but when he meets Mulan, he learns that she cannot be dissuaded and so decides to help her in the perilous times ahead.

Fa Mulan gets the surprise of her young life when her love, Captain (now General) Li Shang asks for her hand in marriage. Before the two can have their happily ever after, the Emperor assigns them a secret mission, to escort three princesses to Qui Gong, China. Mushu is determined to drive a wedge between the couple after he learns that he will lose his guardian job if Mulan marries into the Li family. After the princesses unexpectedly fall in love with the Gang of Three, Mulan decides to help them escape the fate of marrying men they do not love. This contradicts the Emperor's orders and forces him to put Mulan's relationship with Shang into question. They are attacked by Mongolians, and the fate of China hangs in the balance.