Plot
Ratso is a success-starved city rat impresario dreaming to become a famous showman, despite his terrible shows. His assistant is a worm named Wesley, who he passes as the "longest worm in the world" by sticking him through a straw. Ratso plans to take Wesley, against his pleas, to a "carnival" where his pen-pal cousin Ernie claims to host the most acclaimed shows in the animal world. They are chased by rats Phillis and her two brothers, who Ratso is on the run from.
After surfing on a train, the two fall into a bird's nest, where an egg starts to hatch, knocking them out of it. Wesley ends up stuck inside a tequila bottle, and Ratso falls into a yard full of chickens and ducks with the egg. When they threaten and accuse him of egg theft, Ratso lies the egg is his, claiming his "wife" was a duck from the duck-yard, with a friendly duck named Daphne backing up. The egg hatches into an ugly bird, presumed to be a duckling, who now recognizes Ratso as his parent. Ratso is forced to keep "Ugly" and stay in the duck-yard. For months, Ratso digs a tunnel to escape. He forces Ugly to perform as a distraction, attempting to abandon him and find Wesley, but upon seeing the audience laugh at Ugly's bizarre moves, decides to brings him along instead. Phillis finds Wesley who tells where Ratso is going.
Following a map to Ernie's carnival, Ratso and Ugly travel through the woods. After Ratso helps Ugly practice dancing, they encounter a fox which gets disgusted by Ugly, from whom they rescue a goose named Jessie then sleep for the night in an abandoned Volkswagen Beetle. Next morning, Ugly suddenly grows into a teenager. He quarrels with Ratso, and they are joined by Jessie, whom Ugly is smitten with. Ratso tries to cross a frozen river, failing to notice a bridge, but is attacked by a pike, prompting Ugly to save him. As the pike catches them, it sees Ugly up-close, spitting them out to the other side.
As they continue, Ugly dances for Jessie but she unintentionally laughs, making Ugly push her away. Jessie begins to understand Ratso's intentions, trying to dissuade him from humiliating Ugly on stage in vain. Upon reaching the carnival, an abandoned amusement park with gulls, they are ambushed by Phillis and her brothers, then attacked by a tabby cat, who is revealed to be Ernie, carrying a living hand puppet named William. Phillis plans to lure out a protected Ratso.
Before starting the show, Ratso starts having a change of heart, but Ugly decides to perform onstage to help his father and also prove he is more than his looks. The entire audience laughs at Ugly, who realizes that Ratso planned to make him look ridiculous for fame. Devastated, Ugly goes back to Jessie, leaving Ratso. Suddenly, Phillis, who has taken over the duck-yard, captures Ugly and tells Ratso to meet them there. Ratso, Jessie, Ernie and William come to rescue, but are all captured by Phillis and her family members. Held together, Ugly forgives Ratso, who confides that he is not his real father. He is unsure, but still sees Ratso as father, before they finally lovingly embrace.
The next day, Ratso is brought to Phillis. Ugly, fearing that Ratso will face execution, suddenly turns into an adult swan, escapes and frees Phillis' captives. Phillis reveals she is actually forcing Ratso to marry her as he is the last unattached city rat left, but after discovering that Ratso adopted Ugly as his son, she becomes furious, slapping him; Ugly throws Philis into the wedding cake. Ratso awakens in Daphne's arms, and a flock of swans arrive at the pond, telling Ugly to join them in migration. After saying goodbye to Ratso's group, Ugly reluctantly joins the swans and sets off. He had always admired them, but when he realizes they are selfish, prioritizing beauty over love, he turns back, staying with his adopted family. To not ruin the ceremony, Ratso gives Ugly permission to propose to Jessie and the wedding is celebrated. All the characters dance throughout the end credits.
