The introduction of the movie is a cartoon short where we are introduced to a happy, artistic, and mischievous but lonely little monkey somewhere in the jungle. Ted (Will Ferrell) is an employed guide at the Bloomsberry Museum. We are introduced to teacher Ms. Maggie Dunlop (Drew Barrymore) and her students who come to the museum often but they are the only regular visitors. Mr. Bloomsberry (Dick Van Dyke) heartbreakingly informs Ted that the museum will have to close, because it is no longer making any money. Bloomsberry’s son, Junior (David Cross), wants to tear down the museum, and replace it with a parking garage. Ted is convinced to volunteer to go to Africa in place of Mr. Bloomsberry and bring back a mystical, forty-foot-tall idol known as ”Lost Shrine of Zagawa” in the hopes that it will attract customers, much to Junior’s envy. Ted is outfitted with a hideous yellow suit (which causes people to laugh at him), and boards a cargo ship to Africa despite his embarrassment.
With the help of a tour guide and tour group, Ted finds the ”Lost Shrine of Zagawa”, but discovers it to be only three inches tall, much to his disappointment. Ted also encounters the little monkey on his expedition to Africa, and gives the monkey his yellow hat. The monkey, who quickly grows fond of Ted, follows him and boards the cargo ship, unknown to Ted. Ted returns home, and enters his apartment, only to receive a call from Bloomsberry telling him to report to the museum, so Ted can do an interview on the news. The monkey follows Ted to his apartment, the monkey is discovered busily repainting a posh apartment in full scale African animals and due to the strict ”no pets allowed policy”, Ted is evicted by grumpy doorman Ivan (Ed O’Ross). Ted returns to the museum, and reveals to Bloomsberry the idol’s size. Ted is kicked out of the museum by Junior, after the monkey accidentally destroys an Apatosaurus skeleton.
Ted and the monkey sleep outside in the park, and the next morning, Ted follows the monkey into the zoo, where Maggie and her young students name the monkey ”George”. George gets into trouble and begins dangerously floating away on balloons high up over the city, Ted takes flight as well. George’s balloons are popped by spikes on a building and Ted saves him from certain death.
Ted and George make their way to the home of an inventor named Clovis (Eugene Levy), where George uses an overhead projector to increase the idol’s size making it appear 40 feet tall. Ted and George head to the museum to show Bloomsberry the invention. Junior tries to convince his father that it would not be honest to fool the public, but the elder Bloomsberry sees it as the only way to save the museum. Determined to get his parking garage, Junior foils Ted’s plan by pouring hot coffee on the machine and framing George. Believing his life to be ruined, Ted allows animal control to take away George.
Ted speaks with Ms. Maggie who helps Ted ”see” what is really important in his life. Ted regrets the decision to give George to animal control, and boards George’s cargo ship to get him back. Ted tells George that nothing else matters besides their ”buddyship”. In the hold of the ship, George discovers that when reflected in light, the idol reveals a pictogram with the message ”turn your eye to the light, go from blindness to sight”. It turns out that when held up to the sun, the small idol is actually a map to the real idol. They sail the ship back to Africa and George helps him find the real idol which is, indeed, forty feet tall.
The idol is put in the museum, and the museum goes back in business, and becomes more successful than ever when it becomes more hands-on because of the addition of Clovis’s inventions, the interaction with Ms. Dunlop and her young students and, of course, George. Junior finally gets his parking garage, but is upset that Ted is still working at the museum. Ivan invites Ted to move back to his apartment because he likes George, and Ted and Maggie almost start a romance, but George causes more trouble by starting up a rocket ship, forcing Ted to follow him.