The film is a film-within-a-film, wherein Barney, Baby Bop, BJ, and their friends create havoc in a screening room, where they are about to watch Barney & Friends Season 3 Movie (The Muppet Movie). When asked by Kenneth if the film depicts how Barney & Friends Season 3 began, Barney responds "It's sort of approximately how it happened." As the story opens, Barney is enjoying a relaxing afternoon in a treehouse (a background from Barney and Friends Season 3 episodes), singing a tune (the Oscar-nominated "Rainbow Connection") and strumming his banjo, when he is approached by an agent named James Turner (a guest from Season 1 episode "Eat, Drink and Be Healthy!") who recognizes his talents and encourages Barney to pursue a career in Hollywood.
Inspired by the idea of "making millions of people happy," Barney sets off on a cross-country trip to Hollywood, initially via bicycle but eventually via Studebaker after teaming with BJ, who had been working as a hapless stand-up comedian in a sleazy bar, whose husband and wife are cameoed by Mark Wallace and Joanna Wallace (Albert Finney & Audrey Hepburn from Two for the Road) respectively. During their journey, they are pursued by the villainous Cruella De Ville (from Disney movie "101 Dalmatians"), owner of a struggling French-fried frog legs restaurant franchise, and his shy assistant, Scar (from Disney movie "The Lion King").
Mr. Boyd wants Barney to be the new spokesman for his restaurants, but when Barney refuses, Boyd refuses to accept "No" for an answer and resorts to increasingly threatening means of persuasion. Barney and BJ's journey also includes misadventures which introduce them to a variety of eccentric characters, some played by human guest stars, others played by Barney and his friends. During one of their drives, they encounter Joe Scruggs (guest star from The Exercise Circus!) and offer him a ride. Joe Scruggs declines stating that he's heading to New York City to make a debut in public television for Sesame Street. Barney and BJ encounter Juan and Barney's Kids and their manager Stephen who plan to turn an abandoned church into a coffee house.
They manage to disguise Barney's car so that Mr. Boyd can't recognize them. They end up encountering Jason and Min whom had been working as plumbers until their truck crashes into Barney & BJ's car. When it comes to getting a replacement car from a used car dealer owner Greg Murray (guest star from Practice Makes Music), they meet Riff and invite him to join them. Riff runs off and Barney drives away unbeknownst that Riff has left to pack his things. At a carnival, the group meets Baby Bop following a beauty contest (she falls in love with Kermit in the process). She joins Barney and BJ as they continue traveling to Hollywood. Riff is still trailing Barney. At a local motel, Barney meets up with Jason (who works as a pianist at a lounge). Mr. Boyd and Joe Ferguson kidnap Baby Bop and Boyd sends a call to Barney to exit the motel where Barney runs into Boyd's henchmen because Mr. Boyd said that if Barney didn't, Baby Bop would be slaughtered. Mr. Boyd has hired a mad storyteller named Stella the Storyteller in an attempt to brainwash Barney. Fortunately, the scientist insults Baby Bop just before he starts the process, causing her to break free in a rage and defeat Mr. Boyd's henchmen.
Immediately after freeing Barney, Baby Bop gets a call from her agent about a job and leaves Barney to attend it. Following a problem with the film, the movie continues as Barney's group is now joined by Jason. Meanwhile, Mr. Boyd goes to an even further scheme by hiring an assassin named Pink Panther who kills frogs for a living. Mr. Boyd broadcasts on the CB Radio threatening for Barney to surrender and agree to Mr. Boyd's deal or he will become a frog burger. When night falls, Barney's car breaks down leaving the group stranded in the desert. Luckily for Barney, the Barney's Kids and Stephen arrive in their bus having followed the script that Barney left behind and end up taking them to Hollywood. The next day, Joe Ferguson appears to Barney disguised as a motorcycle policeman to warn Barney that Mr. Boyd has hired an assassin to kill Barney. Refusing to be hunted any longer, Barney attempts a Western-style showdown in a ghost town where the group meets Carlos and his assistant Michael (who owns a laboratory in a ghost town). Barney breaks tradition by trying to talk Hopper into backing off, but Boyd refuses and orders his henchmen to kill him and all his friends.
Barney is saved only when one of Carlos's inventions, "insta-grow" pills, temporarily turn Shawn into a giant who is able to permanently scare off Boyd and his men. Barney, Baby Bop, BJ and the gang proceed to Hollywood, where they finally meet the imposing producer and studio executive Abundio Oritz (a guest in Mexico from A World of Music) (a reference to Oritz Abundio Gorde who in real life gives Barney & his friends show the green light), and hires them on the spot under "the standard rich-and-famous contract" after Barney reveals why they've come. The film ends with Barney, BJ, Baby Bop and the gang attempting to make their first movie, which turns out to be a surreal pastiche of their experiences, hinting that the movie they're making is the same one the audience has been watching all along, but a huge stage accident occurs causing most of the props to collapse and fall, and cause the lights to explode. As the dust around shattered roof clears, a stream of rainbow appears, and Barney, Baby Bop, BJ and the kids joined in by other Barney's kids, the characters from Dora the Explorer, Blue's Clues, and the Cyberchase characters sing one last reprise of "Rainbow Connection", ending the film. After the end title appears, Riff tears through the screen "finally" having caught up with the others to the amusement of the audience who then talk amongst each other as the credits roll. After the credits finish rolling, Shawn tells the viewers to go home, then he says goodbye and passes out.
1. Lyrick Studios FBI Warning
2. Lyrick Studios Interpol Warning
3. Hit Entertainment Logo (2001)
4. Bob the Builder Celebrate with Bob Preview
5. Kipper Videos Preview
6. Wiggly Wiggly World Preview
7. Barney's Round and Round we Go Preview
8. Barney Home Video Logo (1995-)
9. Barney's Prime-Time Movie Intro (1996)
10.The Barney and Friends Season 3 Movie Intro (1996)
11.Start of the Movie (1996)
1.Ending to the Movie (1996)
3.The Best of Barney Preview
4.Hit Entertainment Logo (2001)
Barney: '(singing) Life's like a movie, write your own ending.
All characters: (singing) Keep believing, keep pretending, we've done just what we've set out to do. Thanks to the lovers, the dreamers, and you!!!
- Mark Wallace and Joanna Wallace (Albert Finney & Audrey Hepburn) are these characters from "Two for the Road (1967)."
- Cruella De Ville is the character from 101 Dalmatians.
- Scar is the character from The Lion King.
- The closing song, known as "The Magic Store/Rainbow Connection Reprise" featured a crowd of more than 250 characters -- virtually every character that had been created up to that time, with a few exceptions (mainly Pink Panther, Riff, Mark Wallace and Joanna Wallace (Albert Finney and Audrey Hepburn from Two for the Road), and most of the characters and other Preschool TV shows). 137 characters were enlisted from the Characters of America to help the regular character performers film this scene. The crowd sequence took one day to film.
- Another Barney video not to feature any of Barney's theme songs ("Barney Theme Song" and "I Love You"). The first was "Barney's Imagination Island."
- Due to the lawsuit, I Love You wasn't performed in this special.
Rainbow Connection Finale
Barney, Baby Bop, BJ, Juan, Kenneth, Carlos, Jason, Jesse, Kristen, Maria, Rebecca, Tosha, Min, Shawn, Michael (BYG), Luci, Kathy, Amy (BYG), Adam (BYG), Julie, Ashley, Alissa, David (Season 2), Derek, Patty (from 1-2-3-4-5 Senses!), Kim, Tina, Dora, Boots, Swiper the Fox, Fiesta Trio, Backpagck, Map, Isa the Iguana, Tico the Squirrel, Benny the Bull, Big Red Chicken, Explorer Stars, Blue, Steve, Joe, Mailbox, Mr. Salt, Mrs. Pepper, Paprika, Tickety Tock, Slippery Soap, Shovel, Pail, Sidetable Drawer, Jeff, Keesha, Hannah, Steven, Robert, Jackie, Inez, Matt, Digit, and more from the shows and movies listed above