Porco Rosso, a veteran WWI fighter ace and freelance bounty hunter, responds to an alert over an attack on a ferry liner by airborne pirates. Having successfully defeated the airborne pirates, Porco treats himself to a good dinner at the Hotel Adriano, which is run by his long-time friend Gina.
At the restaurant of the hotel the heads of the pirate gangs are contracting Curtis, an arrogant and ambitious American ace, to assist them in their next attacks. Curtis falls in love on the spot with Gina, but is frustrated to see his declarations rebuffed and her affection for Porco. After successfully executing a pirating mission, Curtis tracks down Porco, who is flying to Milan to have his plane serviced, and shoots him down as he experiences an engine outage, claiming to have killed him. Porco actually survives, but all but the airframe of his plane has been destroyed and the fuselage is heavily damaged. Porco continues the trip by train with the remains of the plane, much to the irritation of Gina, already worried about his shooting down and who reminds him that there is a warrant for his arrest in Italy.
Porco arrives discreetly in Milan to meet Piccolo, his mechanic. He learns that Piccolo’s sons have emigrated to find work elsewhere due to the great depression, and much of the engineering will have to be carried on by his young granddaughter Fio. Porco is initially skeptical of Fio’s abilities as a mechanic, but after seeing her dedication in the repair project he accepts her as a competent engineer. With no males to assist in the works, Piccolo calls up an all-female team of all ages to repair the plane. When Porco’s plane is finished, he is unexpectedly joined by Fio on his flight home, with the justification that if the secret police arrest the team, they can say that Porco forced them to help and took Fio as a hostage. Stopping off to refuel on the way, Porco discovers that the new Fascist government is beginning to hire seaplane pirates for their own use, thus putting him out of business.
Back at the Hotel Adriano, Curtis proposes to Gina but she turns him down, saying that she is waiting for Porco Rosso to realize that she loves him and approach her. Upon returning home, Porco and Fio are ambushed by the pirates, who threaten to kill Porco and destroy his plane. Fio successfully talks them out of it, but Curtis appears and challenges Porco to a final duel. Fio makes a deal with him declaring that if Porco wins, Curtis must pay off his debts owed the Piccolo’s company, and if Curtis wins, he may marry her.
That night, at Fio’s request Porco tells a story recalling an event in World War I, when he was still a human, where his entire squadron apart from himself was shot down in a dogfight with Austro-Hungarian aircraft. He recalls blacking out and awakening to find himself in complete stillness, with a white band hovering in the distant sky. Allied and enemy aircraft, flown by the airmen who died in the dogfight, fly past towards the band but ignore him. He sees his friend Berlini and calls him back but is ignored. Porco soon sees that the band is in fact thousands of planes flying together. He blacks out again and recovers skimming above the sea. When he awakes he discovers that he has been turned into a pig, and believes this to be a divine punishment for fleeing from the fight.[note 1]
The next day, the duel is arranged and a large crowd gathers on an island to observe, with the attendants betting heavily on the outcome. After an indecisive dogfight between Porco and Curtis, which soon dissolves into a bare-knuckle boxing match, Gina appears to stop the fight and to warn the crowd that the Italian air force has been alerted and are on their way. Porco barely manages to win the fight upon her arrival, and hands Fio over to Gina, requesting that she look after Fio. Before the plane takes off, Fio gives Porco a kiss. With the crowd gone, Porco and Curtis agree to delay the air force together. When Curtis sees Porco’s face, he reacts with surprise (it is implied, but not shown, that Porco has become human again). The film ends with Fio’s narrating that in the end Porco outflies the Italian air force and is never hunted by them again; Fio becomes president of the Piccolo company, which is now an aircraft manufacturer; Curtis becomes a famous actor; the pirates continue to attend the Hotel Adriano in their old age; and Fio decides to leave it a secret whether Gina’s hope about Porco Rosso was ever realized.
After the credits, a familiar red seaplane appears soaring in the sky before disappearing into the clouds