Kuzco (David Spade) is a young Inca emperor who is rude and narcissistic. Before his eighteenth birthday, he insults the appearances of potential brides and threw an elderly man named Rudy (John Fiedler) out the window for “throwing off his groove.” After Kuzco fires his conniving advisor, Yzma (Ertha Kitt), for abusing her power she comes up with a scheme to take the throne with the help of Kronk (Patrick Warburton), her dim-witted but jovial henchman. Meanwhile, Kuzco meets Pacha (John Goodman), a kind peasant and village leader, and tells him that he wants to demolish his hilltop family home to build himself a lavish summer home called “Kuzcotopia”. Pacha protests, but is dismissed.
During supper, Yzma and Kronk attempt to poison Kuzco, but end up giving him the wrong potion and accidentally transforms him into a llama. After knocking Kuzco out, Yzma orders Kronk to kill him and hide the body, but Kronk has a stroke of conscience and saves him. However, he accidentally leaves him in the back of Pacha’s cart as Pacha leaves the city. Pacha returns home but does not tell his pregnant wife, Chica (Wendie Malick) or children, Tipo and Chaca, about Kuzco’s decision. After awakening in the cart, Kuzco reveals himself as a llama and orders Pacha to take him back to the palace, but Pacha will only do so if Kuzco agrees to spare his family’s home. Kuzco haughtily sets off into the jungle alone, before being ambushed by jaguars. Pacha rescues him and the two make their plan about going to the palace.
Meanwhile, Yzma takes the throne, but Kronk then reveals that he lost Kuzco. The two then set off to find him. Pacha and Kuzco are almost back to the palace when Pacha falls through a bridge and Kuzco refuses to help him up, admitting he never meant to keep his promise. However, he soon finds himself in danger too, and they work together to save both their lives. Without the bridge their journey is delayed, giving Pacha hope that Kuzco will change his mind. Kronk and Yzma stop at a jungle restaurant at the same time Kuzco and Pacha are there disguised as a married couple. Neither party realizes the other is there until Pacha overhears Yzma and Kronk talking about trying to kill Kuzco. However, Pacha is unable to convince Kuzco of their plans. Kuzco then overhears Yzma’s plot to kill him, but when he tries to return to Pacha, he discovers that he has already left and is unable to find him.
Kuzco is soon reunited with Pacha, and they enlist the help of Pacha’s family to keep Yzma and Kronk occupied while they escape. The race to the palace seems to end with Yzma and Kronk falling off a cliff, but they still inexplicably reach the palace first. Yzma orders Kronk to kill Pacha and Kuzco, but Kronk gets into a conversation with his shoulder angel and devil, and finds he cannot bring himself to commit murder, which leads Yzma to insult Kronk and his cooking and resign to do it herself. Yzma calls the guards who do not recognize Kuzco and attack the two of them, while Pacha and Kuzco escape with all the potions in hopes that they’ll find the one that will turn Kuzco back.
After several guards are transformed into animals while testing potions and Yzma is transformed into a kitten, Pacha and Kuzco work together to try and get the last vial. Yzma steals it, but is unintentionally defeated by Kronk. Now a human again, and a more selfless ruler, Kuzco decides to build Kuzcotopia on another hilltop, and Pacha suggests a neighboring hilltop. In the end, Kuzco is shown living next door to Pacha’s family in a modest cabin, sharing a swimming pool with Pacha and his family. Yzma, still a kitten, grudgingly joins Kronk’s Junior Chipmunk troop, along with Pacha’s children, learning squirrel language with Bucky.