A baby Spix's Macaw who is unable to fly and several other birds are captured by smugglers and taken from Rio de Janeiro to Moose Lake, Minnesota. The box containing the macaw falls to the street and is found by a girl named Linda (Leslie Mann), who names him "Blu". Fifteen years later, Linda lives in a bookstore with Blu (Jesse Eisenberg). Túlio (Rodrigo Santoro), an ornithologist, reveals that Blu is the last male of his species, and he needs to mate with a female to preserve it.



Linda takes Blu to Rio de Janeiro. While there, Blu meets Jewel (Anne Hathaway), a female macaw who only cares about escaping. The shelter is raided by smugglers, who are let in by their Sulphur-crested Cockatoo, Nigel (Jemaine Clement), who was posing as a sickly bird. Among them is the smuggler's assistant Fernando (Jake T. Austin), an impoverished and orphaned boy. Blu and Jewel are captured and Nigel explains that he used to be a performing bird on a television program, but was replaced by a parakeet. Out of hatred, Nigel assists smugglers in capturing exotic birds. Blu and Jewel escape, and get lost in the jungle.



While there, they meet a family of toucans. The toucans' father, Rafael (George Lopez), offers to take them to see his bulldog friend Luiz (Tracy Morgan) in removing the chain. Rafael also unsuccessfully attempts to teach Blu to fly. The group meets a Red-crested Cardinal named Pedro (Will.i.am) and his canary friend Nico (Jamie Foxx). Meanwhile, Nigel enlists the aid of a group of thieving marmosets and their king Mauro (Brian Baumgartner), to find Blu and Jewel. Linda and Tulio also try to find Blu, assisted by the repentant Fernando. Pedro and Nico take Blu and Jewel to a bird's samba club named Carnivale, where Blu starts to dance, ending in a duet with Jewel. They are attacked by the marmosets, but their bird friends, including a Roseate Spoonbill they met at the samba club named Kipo (Bernardo de Paula) fend them off long enough for the five to escape.



Fernando leads Linda and Tulio to the smugglers' hideout, where they learn the criminals plan to use Carnaval as a cover to regain Blu and Jewel and escape. The group meets Luiz, who unintentionally uses his drool to release Blu and Jewel from the chain. Jewel is overjoyed but Blu is depressed because of his inability to fly and part ways. When Nico and Pedro inform Blu of Jewel's capture by Nigel, Blu plots a rescue mission. Linda and Tulio infiltrate Carnivale by posing as dancers, but Blu, Rafael, Nico and Pedro are captured by Nigel. Linda and Tulio follow the smugglers, but fail to stop them when their plane flies off. During the flight, Blu breaks out of his cage, and they flee except for Jewel, who knows Blu is still fearful of flying. Nigel grievously injures Jewel's wing, but Blu attaches a fire extinguisher to Nigel, blasting him out of the plane and hitting its propeller.



Jewel is pushed out of the plane, and Blu jumps after her. After Jewel kisses him, Blu is overcome by the rhythm of his heart and flies. They return to Linda and Tulio, who attempts to tend to Jewel's hurt wing. Jewel is reluctant, but Blu convinces her to trust Tulio.



Some time later, Linda and Tulio have organized the "Blu Bird Sanctuary", a part of Rio's jungle protected from smugglers. Blu and Linda remain very close, though she also has a relationship with Tulio, and is now living in Rio to help run the Blu Bird Sanctuary along with Fernando. Blu and Jewel now live in the jungle, and are the parents of three chicks. As for Nigel, he survived but is humiliated by Mauro for his loss of feathers while the smugglers are sent to jail.