A large tidal wave triggered by a distant explosion threatens to drown the island of Atlantis. In the midst of an evacuation from the capital city, the Queen of Atlantis is caught by a strange, hypnotic blue light and lifted up into the “Heart of Atlantis”, a powerful crystal protecting the city. The crystal consumes her and creates a dome barrier that protects the city’s innermost district. She leaves behind a young daughter, Princess Kida, as the island sinks beneath the ocean.
Thousands of years later in 1914, Milo Thatch, a cartographer and linguist at the Smithsonian Institution who is marginalized for his research on Atlantis, believes that he has found The Shepherd’s Journal, an ancient manuscript that contains directions to the lost island. After the museum board declines his proposal to search for the journal, a mysterious woman, Helga Sinclair, introduces Milo to Preston B. Whitmore, an eccentric millionaire. Whitmore has already funded a successful effort to retrieve the journal as repayment of a debt to Milo’s grandfather, and recruits Milo to lead an expedition to Atlantis as soon as he receives it.
The expedition departs with a team of specialists led by Commander Lyle Rourke, who also led the journal recovery expedition. The crew includes Vinny Santorini, a demolitions expert; Mole Molière, a geologist; Dr. Joshua Sweet, a medical officer; Audrey Ramirez, a mechanic; Mrs. Wilhelmina Packard, a radio operator; and Cookie Farnsworth, a mess cook. They set out in the “Ulysses”, a massive submarine. During the journey, they are attacked by the monstrous Leviathan, a robotic lobster-like creature that guards Atlantis’ entrance. The “Ulysses” is subsequently destroyed, but Milo, Rourke, and part of the crew escape by making their way to an underground cavern, described in the journal as the entrance to Atlantis.
After traveling through a network of caves and a dormant volcano, the team reaches the outskirts of Atlantis. They are greeted by Kida who resembles a young woman and discover that the Atlantean language is the basis of many existing languages. Kida enlists Milo’s aid in deciphering the Atlantean written language, long forgotten by the natives. By swimming deep within the city’s submerged ruins and translating underwater murals, Milo helps Kida uncover the nature of the Heart of Atlantis: it supplies the Atlanteans with power and longevity through the crystals worn around their necks. He is surprised this is not mentioned in the journal, but upon examination realizes a page is missing.
Returning to the surface with Kida, Milo discovers Rourke has the missing page. Rourke and the crew betray Milo, intending to bring the crystal to the surface and sell it. Rourke mortally wounds the King of Atlantis while trying to extract information about the crystal’s location, but finds its location for himself hidden beneath the King’s throne room. The crystal detects a threat before merging with Kida. Rourke and the mercenaries lock Kida in a crate and prepare to leave the city. Knowing that when the crystal is gone the Atlanteans will die, Milo berates his friends for betraying their consciences and ultimately convinces them to leave Rourke and remain in Atlantis. The King explains to Milo that the crystal has developed a consciousness – it thrives on the collective emotions of the Atlanteans and provides power, protection and longevity in return. It will find a royal host when Atlantis is in danger. He then reveals that the sinking of Atlantis was caused when he attempted to use it as a weapon of war. As he dies he gives his crystal to Milo, telling him to save Atlantis and Kida. Encouraged by Sweet, Milo rallies the crew and the Atlanteans to stop Rourke.
In the ensuing battle inside the volcano, Helga and the other mercenaries including Rourke are all killed. Milo and the others successfully fly the crystal back to the city, as the volcano erupts. With lava flowing towards the city, Kida (in her crystal form) rises into the air and creates a protective shield. The lava breaks away harmlessly, showing a restored Atlantis, and the crystal returns Kida to Milo. The surviving crew members return to the surface and promise to keep the discovery of Atlantis a secret. Having fallen in love with Kida, Milo stays behind to help her rebuild the lost empire.