As the opening song of the film (Peaceful Valley) indicates, Littlefoot and company's arrival to the Great Valley is a relatively recent occurrence. The children are living happily in their new home, under their families' watchful eyes. They also reunite with Ryan, Winnie the Pooh, Ash Ketchum, Tai, Daniel Cook, Stan, SpongeBob SquarePants, Mickey Mouse, Bugs Bunny, Ttark and the rest of the characters. When the gang tries to get to the sheltering grass to play, but land in the tar pit surrounding it, the grownups come and save them and chastise them for disobeying them, then lecture them that night. Cera then tells the others that they need to prove they are independent by running away for a while into the Mysterious Beyond, a location just outside the valley. Before they leave, they notice two egg nappers and Team Rocket (Jessie, James, and Meowth) Pete, Sheldon J. Plankton and the bad guys stealing an egg from Ducky's nest. They chase them into the Beyond, during which a landslide occurs. The egg rolls safely back to the nest, but the five are under the impression that it was destroyed in the landslide. This upsets Ducky until she notices what looks like the egg, only slightly larger.
The gang "return" this egg to the Valley, only to find out that the stolen egg and this one are not the same. They decide to hatch it, nonetheless, until the egg hatches, revealing a baby sharptooth. While the others run away, Littlefoot decides he's safe, and tries to raise the hatchling on leaves, to no avail. When he hears the others calling for help, as the egg nappers Ozzy and Strut and Team Rocket are attacking them, he runs to their aid, while "Chomper" follows him. Chomper's shadow frightens the villains away, after which Littlefoot exchanges introductions between Chomper and the others. They accept him, until he bites Cera by instinct. He is told this is considered bad behaviour in the Great Valley, and runs off. When the others follow him, they find him chasing insects on top of the Smoking Mountain (volcano).
Ozzy and Strut and Team Rocket attack the children and the others again, but Chomper once more comes to the rescue, biting onto Strut's tail. At that moment, the volcano erupts, slowly oozing lava in the children's path. Littlefoot pushes a tree over a canyon, to make a bridge for the others. Once across, they find two adult Sharpteeth on the other side. They escape them, and make it back to their families. After fighting the Sharpteeth off, the adults inquire how they entered the valley, to which the children confess over their adventure the night before, and the landslide which resulted. The adults set off to block the new entrance to the valley, and tell the children to stay behind. Littlefoot runs off to find Chomper, but is chased by one of the Sharpteeth. When trapped in a rotting log, they are approached by the sharpteeth. Then, Chomper calls to them, and they recognize him as their son. They then leave with him. Littlefoot, while out of the log, gets captured by Strut and Ozzy. Chomper hears Littlefoot screaming, and he goes to save him. Then Chomper's parents chase the egg nappers into the Mysterious Beyond again, Tigger and Tiger blasts off Team Rocket Pete, Sheldon J. Plankton and the bad guys into the sky, and Littlefoot and Chomper say their final goodbyes. Littlefoot returns to the other plant-eaters. Littlefoot's grandpa tells him from then on, he should stay close to the herd. Then, he helps in knocking down some more rocks to seal up the entrance between the Great Valley and the Mysterious Beyond.
- Ash Ketchum, Tai, Mickey Mouse, WIll Stronghold, Bugs Bunny, Daffy Duck, Ttark, the rest of the characters, Team Rocket (Jessie, James, and Meowth), Pete, Sheldon J. Plankton and the bad guys guest star in this movie.