Plot
Ratso is a success-starved city rat impresario who deals with business in the world of entertainment: his assistant is a worm named Wesley, who he passes off as the "longest worm in the world" by sticking him through a straw. Ratso's dream is to become a famous showman. He plans to take Wesley to an amusement park where, according to him, his pen-pal cousin Ernie hosts the most acclaimed shows in the animal world. Wesley quits so Ratso takes him by force. Suddenly the two are chased by Phillis and her two brothers, a family of rats from which Ratso is on the run.
After a short train ride, the two fall into a bird's nest, where an egg starts to hatch and knocks them out of it. While Wesley ends up inside a tequila bottle, Ratso and the egg fall into a farm full of chickens and ducks. When they threaten and accuse him of egg-theft, Ratso lies that the egg is his and his "wife" was a duck from the farm. A friendly duck named Daphne back him up. The egg hatches to reveal an ugly baby bird they presume to be a duckling, who recognizes Ratso as his parent. Ratso is forced to keep "Ugly" and stay in the duckyard. To escape, the latter spends months digging a tunnel to overcome the fence, creating a mound of earth which passes for a mountain with a stage for the little duckling he has adopted to perform. He attempts to abandon Ugly and find Wesley but, upon seeing how audience laughs at the ugly duckling's bazare moves, changes his mind and brings him along instead. Wesley tells Phillis where Ratso is going.
Following a map Ernie sent Ratso, Ugly and Ratso travel through a wood and encounter a fox, from which they recue a female goose named Jessie. Ugly drives it off with his face and they take refuge in an abandoned Volkswagen Beetle where they sleep for the night.
The very next morning, Ugly suddenly grows into a teenager and treats his adopted father rudely. The two are joined by Jessie, whom Ugly fall instantly in-love with, much to Ratso's chagrine. Ratso tries to cross a frozen river, failing to notice the bridge, but is attacked by a pike and Ugly saves his father. Upon seeing Ugly's face, the pike spits them out of the river to the other side.
As the three continue, Ugly dances for Jessie but she accidentally laughs and he pushes her away. Jessie begins to understand Ratso's intentions and tries to dissuade him from humiliating Ugly on stage, but apparently the rat does not listen to her. Once they reach the carnival, which turns out to be an old abandoned amusement park, they are ambushed by Phillis and her brothers and attacked by a tabby cat. The cat however is revealed to be Ratso's cousin Ernie, with a living hand puppet named William. Now Ratso has protection from Phillis, so she plans to make him come to her.
Before starting the show, Ratso begins to doubt his idea, thinking back to what Jessie said. However, Ugly decides to throw himself onto the stage to try to help his father and also prove he is more than he looks. Before Ratso can stop him, Ugly dances and is laughed at by the entire audience. He realises that Ratso's plan was to become famous by making the ugly duckling look ridiculous, and leaves saddened and embittered. Suddenly the young man is captured by Phillis, who has meanwhile taken over the duckyard. She tells Ratso to come to the duckyard if he wants to see his friend again. Ratso respects the agreement and, with Jessie, Ernie and William, comes back for Ugly. After being locked up together, he reveals to Ugly that he is not his real father, but Ugly reveals he already knew, and that he does not care anyway, as he considers him as such, and the father and son embrace.
The next morning, Ratso is taken to Phillis. Ugly, fearing that his Dad will face execution, escapes the cage after turning into an adult, revealing himself to be a swan. However, it turns out that Phillis is actually forcing Ratso to marry her, because he is the last unattached bachelor rat left. But after finding out that Ratso has an adopted son, she becomes furious with him and starts brutally hitting him, until Ugly punches her onto the wedding cake. Ratso awakens in Daphne's arms and a flock of swans arrive at the pond. They say that it is time for Ugly to join them in migrating. After saying goodbye to his Dad and all his friends, Ugly joins his peers and sets off. He has always admired the swan, however, as he realises that swans are actually superficial animals who put beauty first and care nothing for love, he turns back and stays with his real family. In order not to ruin the ceremony, Ratso gives Ugly permission to declare himself to Jessie, so the wedding between the two is celebrated and the all characters dance throughout the end-credits.
