When the Huns invade China by breaching the Great Wall, the Emperor realizes that he must conscript his male subjects to the Imperial Army. He sends a letter to every household in China requiring every family to send one man to fight with the army. Fa Mulan, a young girl who has proven ineligible for marriage and is worried about the safety of her ailing father, decides to disguise herself as a man and take her father's place in the army. Wearing his armor, she leaves early one morning.
When her family awakens, they realize what she has done. Mulan's grandmother is distraught and prays to the family ancestors to keep Mulan safe. The ancestors respond and decide to send the great stone dragon to protect Mulan, and they send a smaller dragon, a demoted guardian, Mushu, to summon the stone dragon. When Mushu breaks the stone dragon accidentally, he decides to go help Mulan fight himself, in the hope that his success will win him favor with the ancestors, who will reinstate him as a guardian.
At first, Mulan—now disguised as the young man "Ping"—is not much of a soldier, but with her fellow beginners, Yao, Ling and Chien-Po, she gradually learns how to become a warrior. They are all guided by the brave and competent Li Shang, whose father is leading the Imperial Army in the mountains. Mushu wants to see Mulan succeed and shine in the army, so when Chi Fu, the Emperor's assistant, decides that Shang's troops are not fit for battle, Mushu sends a fake instruction from the Captain's father, General Li, telling him to bring his men to the mountains as reinforcements. The soldiers set off for battle, but when they arrive, they find that the Huns have beaten them there and the General and his men have been massacred.
Shang sadly leads his troops away, but as they go, they are ambushed by the Huns. Thinking strategically, Mulan uses a canon to cause an avalanche, which buries the Huns in snow. Shan Yu, the brutal leader of the Huns, is angry and slashes Mulan in the torso. When a doctor examines Mulan, he finds that she is a woman and reveals her to her fellow soldiers. While Chinese law dictates that Shang should kill Mulan for her deception, he is too impressed by her bravery and simply banishes her from the army.
As Mulan is trying to decide how she will leave the mountain and get home, she sees Shan Yu and some Huns have survived the avalanche and are heading for the Imperial City. Meanwhile, in the city, Shang and his army are being celebrated as war heroes. Mulan rushes to the city and tries to warn Shang about the Huns, but he does not believe her. The Huns capture the Imperial Palace and take the Emperor prisoner, at which point Mulan helps Yao, Ling, and Chien-Po to disguise themselves as concubines and gain entry into the palace. Shang also enters with them and together they defeat Shan Yu's men. Shang stops Shang Yu from personally assassinating the Emperor, and Mulan tricks him into chasing her onto the roof of the palace. They engage in hand to hand combat until Mushu, on Mulan's instruction, fires a rocket directly at Shan Yu, which propels him into a tower where fireworks are stored. There is a huge explosion and he is finally killed.
Mulan is a hero; the Emperor awards her his crest and she is also given Shan Yu's sword. She is offered a position on the Emperor's Council, but politely turns it down, requesting instead that she be allowed to return home to her family. Her request is granted and when she arrives she gives her father the awards she has received. Shortly after, Shang arrives at Mulan's, ostensibly to return her helmet, but clearly with the intention to see her again. Mulan's family invites him to stay for dinner, which he readily accepts. During the celebration that ensues, Mushu is reinstated as a family guardian.
