Seventeen-year-old Mary Katherine, or M.K., moves in with her eccentric scientist father Professor Bomba, who has been searching for tiny humanoid soldiers called Leafmen. They protect the forest that Bomba lives near from wicked creatures called Boggans and their malevolent leader Mandrake. An independent young soldier named Nod decides to quit, much to the ire of the no-nonsense Leafmen leader Ronin.
The queen of the forest, Queen Tara, must choose an heir to her throne and goes out to a field of leaf pods onboard her flying barge and escorted by the Royal guards, arriving at the field guarded by a laid-back slug named Mub and a wannabe Leafman snail named Grub. Immediately after she chooses a pod, the Boggans attack. Tara flees the area with the pod, and though flying Leafmen bodyguards do their best to protect her, they are soon overwhelmed by the sheer number of Boggans. Unable to reach the barge and the safety of the Guards, while being chased, Ronin arrives for her and the pair fly off on his hummingbird mount. They are then attacked by Mandrake and his son Dagda. Dagda is killed by Ronin, but the former shoots Tara beforehand.
Meanwhile, M.K. decides to leave after having an argument with Bomba about his research. Before she can leave, Bomba's dog Ozzy runs into the woods. While looking for Ozzy, M.K. sees Tara falling. Dying, Tara gives her the pod and uses her magic to shrink her. She tells M.K. to take the pod to Nim Galuu, a glowworm wizard, before she dies, and M.K. joins Ronin and the Leafmen, along with Mub and Grub. Ronin discovers that Nod has entered a race against other creatures and bugs on birds. Nod goes back on a deal with a short-tempered toad gangster named Bufo to throw the race. Before Bufo and his two henchmen can feed Nod to a snake, Ronin intervenes and orders them to leave. A reluctant Nod joins him, M.K., Mub, and Grub after hearing about Queen Tara's death, which Bufo overhears.
Ronin, Nod, M.K., Mub, and Grub eventually track down Nim Galuu. He then leads them down to the scroll library, where M.K. discovers Tara's brief message before shrinking her, and a message that will get her back to normal size. When Ronin leaves, Nod takes M.K. on a deer ride and they begin to fall in love. Meanwhile, Mandrake has had the Boggans bring Bufo to him, finding out the location of the pod. Mandrake goes to Nim Galuu's place to steal the pod, which, if it blooms in darkness, will help Mandrake destroy the forest. He takes the pod and kidnaps Mub and Grub. Ronin scolds Nod for not being there to protect the pod. To get into Boggan territory undiscovered, M.K., Nod, and Ronin set out to Bomba's house to get some disguises, where M.K. learns that the Leafmen have deliberately been leading Bomba off their trail. Bomba sees that he has visitors and captures M.K., fainting when he sees her. M.K. marks the location of Moonhaven on a map Bomba has made of the forest before rejoining Nod and Ronin.
When they reach the Boggan land Ronin distracts the Boggans while M.K. and Nod rescue Mub, Grub, and the pod. Mandrake discovers them and orders the Boggans to stop them. M.K., Nod, Mub, and Grub escape alive, but Ronin sacrifices himself to ensure their escape. Before the full moon can sprout the pod at Moonhaven, Mandrake's bats block the light, causing the pod to begin sprouting in darkness. The Leafmen set out to fight the Boggans; M.K. tries to get help from her father by visiting his various cameras he had set in the forest. However, upon regaining consciousness, Bomba believes that he didn't really see M.K. and that he has been insane all these years, and shuts down all his cameras. He changes his mind when he sees the red push-pin that M.K. had put on his map.
Bomba is overjoyed to see that he has been right and he follows M.K. to Moonhaven. M.K. uses Bomba's iPod to make bat sounds, luring Mandrake's bats away. Meanwhile, Mub and Nim Galuu try to stop Mandrake from reaching the pod, but are unsuccessful. Just then, Ronin appears, bearing scars and bruises from the Boggans. Mandrake manages to outdo him, but is defended by Nod, who finally realizes the importance of teamwork. Before Mandrake can obtain his victory, the pod blooms in moonlight, defeating the Boggans, and sealing Mandrake into the burl of a nearby tree.
The chosen heir is the flower child who helped save Tara earlier in the film. Grub becomes a Leafman, Nod and Ronin reconcile, and Nod and M.K. kiss before M.K. is returned to her original size.
After reuniting with Bomba and becoming his assistant, the human family still keeps regular contact with their small friends as they continue the research of their world.