The Huns, led by the ruthless Shan Yu, invade China by breaching the Great Wall. The Emperor orders a general mobilization, with conscription notices requiring one man from each family to join the Imperial Army. Fa Mulan, an adventurous young woman, hopes to bring honor to her family. She is arranged to meet a matchmaker to demonstrate her fitness as a future wife, but is deemed a disgrace after several mishaps.
Fa Zhou, Mulan's elderly father and a military veteran, is conscripted. She tries dissuading him from going, but he insists that he must do his duty. Fearing for his life, she cuts her hair and takes her father's sword and armor, disguising herself as a man so that she can enlist in his stead. Quickly learning of her departure, Mulan's grandmother prays to the family's ancestors for Mulan's safety. In the family's temple, the spirits of the ancestors are awakened by Mushu, a small red dragon who is a disgraced former family guardian. The Great Ancestor decides that the powerful stone dragon guardian should guide Mulan, and sends Mushu to wake him. After accidentally destroying the guardian's statue, Mushu decides to redeem himself to the ancestors by personally aiding Mulan.
Reporting to the training camp, Mulan passes as a man named "Fa Ping", with Mushu providing encouragement and clumsy guidance throughout her deception. Under the command of Captain Li Shang, she and her fellow recruits—including three named Yao, Ling, and Chien-Po—gradually become trained soldiers. The Emperor's belligerent counsel, Chi-Fu, threatens to dissuade the Emperor from allowing Shang's men to fight. Mushu then writes a fake letter from Shang's father, General Li, ordering Shang to follow the main imperial army into the mountains. The reinforcements set out and discover that the Huns have slaughtered Li and his troops.
As the soldiers march up a mountain pass, they are ambushed by the Huns. Mulan uses a Huolongchushui cannon to trigger an avalanche that buries the Hun army. An enraged Shan Yu wounds Mulan during the battle, and her true gender is revealed when the wound is bandaged. Instead of executing Mulan as the law requires, Shang spares her life and expels her from the army. Mulan is left behind as the other soldiers depart for the Imperial City to report the Huns' defeat. However, Shan Yu and several of his warriors have survived, and Mulan sees them heading towards the city.
Mulan enters the city and warns Shang shortly before the Huns capture the Emperor and seize the palace. Mulan, Yao, Ling, Chien-Po, and Shang enter the palace and defeat Shan Yu's men. Shang prevents Shan Yu from attacking the Emperor, and Mulan lures the Hun leader onto the roof, where she pins him there with his own sword. Guided by Mulan, Mushu fires a large skyrocket at Shan Yu, propelling him into a fireworks launching tower. The Emperor and the city's assembled inhabitants praise her for having saved them, and they bow to her in honor. She accepts the Emperor's crest and Shan Yu's sword as gifts but declines his offer to be on the royal council. Mulan returns home and presents these gifts to her father, but he ignores them, happy to have her back. Having become enamored with Mulan, Shang also arrives and accepts her invitation to stay for dinner. Mushu is reinstated as a Fa family guardian as the ancestors celebrate.
