On Fairy Tale Island, a group of heroic princes (Merlin (the leader), Arthur, Jack, Hans and the triplets Pino, Noki and Kio) known as the Fearless Seven (F7) save a Fairy Princess from a dragon. But once they see her green face, they believe she is a witch and attack her. To teach them a lesson, she curses them to turn into green dwarfs whenever people look at them. In order to break the curse, they must get a kiss from "the most beautiful woman in the world", which they doubt will happen due to their looks.
A year later, in the kingdom of King White, the evil witch Regina takes over after marrying the king and people begin disappearing, including the king himself. Regina uses a magic apple tree to try each day to create a pair of magic red shoes that provide eternal beauty, but continually fails. Snow White, the overweight but very strong and kind daughter of King White returns to the castle to find out where her father is. She finds the newest pair of shoes and puts them on. These shoes finally work and transform her into a beautiful, thin princess. Regina attacks her, unaware she is her stepdaughter. Snow flees from her stepmother on a stolen broomstick as the magic tree dies. Following a message from her father, she goes to find the F7.
Snow crash lands at the Seven's home. They are all immediately infatuated with her, and surprised that she likes them in spite of their appearances. They decide to help her find her father, hoping to win her heart and a curse-breaking kiss. That night, thinking she saw her father, Snow (now under the alias of "Red Shoes") runs into the forest but encounters a giant wooden bunny instead. The F7 save her and capture it. The triplets invent a giant wooden robot in the process.
The next day, following advice from her Magic Mirror, Regina hires the selfish pathetic Prince Average to find "the woman with the red shoes", promising this woman will be his birthday party date. Snow and Arthur go to "Golden Goose Avenue" to distribute posters of King White. Merlin, who has been assigned to stay and watch over the bunny, manages to befriend it and rides it to join them. Snow briefly takes the shoes off and Merlin uses his magic lightning cards to save her from Average's bullying guards. Because he does not recognise her she decides to keep the shoes on. When they return home, Average arrives with an army to force "Red Shoes" to be his date. The Seven rescue her and drive the invaders away. Snow grows especially close to Merlin and says she likes him the way he is "whether her eyes are open or closed". She decides to show him her real self but finds she can no longer remove the shoes. When Average and his two henchmen return empty-handed, Regina gives them magic apples that turn them into monstrous wooden bears.
In the morning, Snow and Merlin use the broomstick to make the triplets' robot fly and drop posters over Golden Goose Avenue, but Merlin's daydreaming causes them to crash. As they wander by a river together, Snow confesses her feelings for Merlin and they kiss. Merlin is shocked to find the kiss did not work and his curse remains. Suddenly, Average and his henchmen attack. Merlin convinces Snow to run and not look at him, as he is stronger in prince form, and defeats the monsters. But Average grabs him and they fall into the river. Snow jumps in to save him, but he is trapped under a large boulder. She removes the shoes, allowing her to use her strength to save Merlin. Three wooden bear cubs and the bunny come to help. Regina, finally learning Snow's identity, decides to find her herself.
Snow reveals her name and the truth about her father and Regina to Merlin. Merlin is now unsure about Snow's appearance and she says he and the others probably would not have helped if she had been herself. Ashamed, Merlin leaves. Snow decides she is better off with the shoes. Merlin realises Snow likes him for who he is. After a sad walk, Snow finds Merlin, who offers her an apple to remove the shoes. But he is revealed to be Regina in disguise. Regina captures her stepdaughter before Merlin and the wooden animals can help. Merlin rides the bunny to the kingdom after sending the bears to fetch the others and make more lightning cards. The bunny knows a hidden passage and Merlin sneaks into the castle.
Regina (now aged and weak), tries to force Snow to eat a magic apple. When Snow refuses, Regina reveals Merlin has been captured, and threatens to kill him. Snow bites into the apple and turns into a new apple tree capable of producing a new pair of shoes. Merlin is taken to the Mirror who taunts him by explaining that Snow will die when Regina takes the shoes. Merlin manages to break free and tries to fight it off but fails. Before the Mirror can kill him, the rest of the Fearless Seven and wooden animals save him. A battle ensues and Jack destroys the Mirror. Merlin sacrifices himself, pushing Regina off the edge of the castle and electrocuting them both in a great explosion of lightning. The bunny suddenly changes back into King White, the bears into human children, and Snow (back to her real self) reunites with her father. Everyone grieves over Merlin but the triplets save him. He tells Snow she is "the most beautiful woman in the world, whether his eyes are open or closed" and dies in her arms. Snow tearfully gives him one last kiss, which breaks the curse and restores his life. They accept each other's appearances and everyone celebrates, while Arthur wonders "who that girl is".
In the end credits, Snow and Merlin marry and the other princes find their own "unusual looking" girlfriends. The Fairy Princess fishes Prince Average (human again) out of the river. When he is rude to her, she turns him into another green dwarf
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