The movie opens in the swamp lands that Kermit the Frog calls home. After meeting his old friend Horace D'Fly again, he recaps an adventure about his childhood back when he was twelve years old where he enjoyed a serene amphibian's life with his buddies Croaker the Frog and Goggles the Toad, where Kermit wonders what else the world has to offer and what lies beyond the swamp, but is companions do not think the same. When they run into two scientists named Dr. Hugo Krassman (John Hostetter) and Mary (Kelly Collins Lintz), before they are caught by them, Arnie the alligator saves them and warns them about the dangers lurking outside the swamp. The frogs soon spy a nameless thief who tries his luck at the swamp. The next day while they talk about their dreams, they run into the bully of the swamp named Blotch, an bullfrog, who brutally attacks Goggles after he mistakes him for mooning him, but this causes them to get kidnapped by a pet store owner named Wilson, and Kermit and Croaker have no choice but to venture forth in order to save their friends and are secretly followed by the thief, who hears of treasures on the journey but fails in stealing any.
After getting run over by Wilson's truck and having tire tracks on his chest, Croaker is no longer able to hop. When Goggles and Blotch are taken into a pet store, Blotch's anger causes problems, especially when they get stuck in a cage with Vicki the snake, but Goggles is able to save them by making Vicki's skin itch with his slime. Along the way, Kermit and Croaker meet a stray dog named Pilgrim (voiced by Cree Summer), who saves them from Krassman and Mary, who decides to help them with finding Goggles and Blotch and getting back to the swamp, and her knowledge of the outside world proves vital in helping them reach the pet shop. The Thief tries to steal the ruby. Along the way, Kermit discovers the excitement of the movies, the power of a wishing star, and even what it's like to fly. Meanwhile, the other animals at the store manage to convince Goggles and Blotch in a lively musical number that being sold to someone as a pet isn't such a bad idea. Kermit is able to find Wilson's truck by using balloons, but because Goggles isn't in the box anymore, he finds a monkey in a box. A bumpy ride causes Kermit to fall off of the truck, losing the truck again. But, the idea of a pet is spoiled for Goggles and Blotch, who still don't know that the next day they are being taken to George Washington's High School for biology class's dissection. Kermit is able to find Pilgrim and Croaker again, and together they finally find the pet store, but they find out from Vicki that she overheard them going to George Washington's.
The next day, Kermit and Croaker are able to get discovered on purpose by Wilson to get to George Washington, but they are able to escape the box they are in by starting a fire. They meet Pilgrim in the high school again, who followed them, but while trying to find Goggles and Blotch, Pilgrim and Croaker get captured by Wilson, anyways. Kermit overhears Wilson heading to biology class, so he hitches a ride on a student's backpack whose heading to the same class and the Thief hitches a ride on the back of a student, but all of the students don't want to dissect the frogs. Krassman decides to dissect Goggles, but Blotch takes his place to return the favor for rescuing them from Vicki. But, Krassman changes his mind when Wilson brings Croaker in. Mary refuses to show how the dissection is done, so she leaves the classroom and she and Wilson find out that Pilgrim is a friend of the frog. In a daring rescue, Kermit manages to free Croaker from the dissection table and fend off Dr. Krassman using some swashbuckling techniques he picked up at the movie theater from the movie The Black Arrow, but Krassman is able to defeat Kermit, Croaker, and Blotch. Goggles finds the knife that Kermit dropped, but after he picks it up, Krassman spots him. Despite the warnings that Kermit should never talk to humans, Kermit stops Krassman from killing Goggles by talking, and he addresses Krassman directly asking him to please release the frogs. This also reveals that Pilgrim can talk. This fortuitous decision reveals that Krassman, as a child, when he was going to dissect his first frog, the frog he was going to dissect told him to stop, but he refused to say it out loud to everyone else in Krassman's classroom, which caused him to be humiliated. With the truth at long last revealed that frogs can indeed talk, Krassman frees all the frogs and dismisses the class and enables Kermit and his friends to return home. When they hitch a ride back on Wilson's truck, Wilson adopts Pilgrim and the four frogs head home. Kermit mentions that the thief eventually was put in jail for years but becomes the Captain of the Guards.
Back in the present, Kermit enters the swamp to meet up with his three old frog friends, and Horace D'Fly is seen again singing. Kermit, his three frog friends, the frogs, and the Thief dance and sing "Batacuda Famillia". As the film ends, the thief appears one last time to steal the golden THE END letters, then breaks the fourth wall by taking the film itself before scurrying away. The end credits of the South African/Australian prints show scenes from the movie that were scrapped from the edited versions, including the Thief narrowly avoiding getting his arms chopped off, behind the credits. After the credits, the logo of the movie is Kermit's Swamp Years.
- The Thief (Miramax version) - from The Thief and the Cobbler
- Jonathan Winters - The Thief
- William Bookston - Wilson
- John Hostetter - Hugo Krassman
- Christian Kebble - Young Jim Henson
- Kelly Collins Lintz - Mary
- Cree Summer - Pilgrim the Dog, Kermit the Frog's Mom (voice)
- Ringo the Dog - Pilgrim the Dog (wide shots)
- Steve Whitmire - Kermit the Frog, Young Kermit the Frog, Jack the Rabbit, Chico the Frog
- Joey Mazzarino - Goggles the Toad, Joe the Armadillo, Turtle #1
- Bill Barretta - Croaker the Frog, Horace D'Fly, Roy the Frog, Turtle #2
- Alice Dinnean - Vicki the Snake, Performer of Kermit the Frog's Mom, Performer of Pilgrim the Dog
- John Kennedy - Arnie the Alligator, Blotch the Bullfrog, Monkey
- Dave Goelz - Young Waldorf
- Jerry Nelson - Young Statler