In Ancient Greece, after imprisoning the Titans beneath the ocean, the rulers of the Greek gods, Zeus and his wife Hera, have a son named Hercules on Mount Olympus. While the other gods and Skunk and friends are joyful, Zeus' jealous brother Hades (whom Baboon and the Ninja Monkeys are working for) plots to overthrow Zeus and rule Olympus. Turning to the Fates for help, Hades learns that in eighteen years, a planetary alignment will allow him to locate and free the Titans to conquer Olympus, but only if Hercules does not interfere. Hades sends his minions Pain and Panic to dispose of Hercules. The two succeed at kidnapping the infant and feeding him a formula that turns him mortal, but fail to remove his superhuman strength before Hercules is discovered by Skunk and friends and Hercules is soon found and adopted by the farmers Amphitryon and Alcmene.
Years later, the teenage Hercules becomes an outcast due to his strength, and wonders where he came from. After his foster parents reveal the necklace they found him with, Hercules and the decides to visit the temple of Zeus for answers. while the valley animals accompany him. The temple's statue of Zeus comes to life and reveals all to Hercules, telling him that he can regain his godhood by becoming a true hero. Zeus sends Hercules and his forgotten infant friend Pegasus to find the satyr Philoctetes—"Phil" for short—who is known for training heroes. They meet Phil, who has retired due to numerous disappointments, along with the animals old friend Mrs. Duck but Hercules inspires Phil to follow his dream to train a true hero that will be recognized by the gods. Phil and the animals train Hercules into a potential hero, and then head towards Thebes. On the way, they meet Megara—"Meg" for short—a sarcastic damsel whom Hercules saves from the centaur Nessus. After Hercules and the others leave, Meg is revealed to be Hades' minion, who sold her soul to him to save an unfaithful lover.
Arriving in Thebes, Hercules is turned down by the downtrodden citizens until Meg appears, saying that two boys have become trapped in a gorge. Hercules saves them, unaware that they are Pain and Panic in disguise, allowing Hades to summon the Hydra. Hercules defeats it and becomes a celebrated hero, but despite Hercules' growing fame and defeating every subsequent monster Hades unleashes, Zeus tells him he is not yet a "true" hero. Saddened and frustrated, Hercules turns to Meg, who is falling in love with him. Hades and Baboon learn of this and on the eve of their takeover, he holds Meg hostage and offers her in exchange for Hercules surrendering his powers for a day. Hercules accepts on the condition that Meg will be unharmed and, after losing his strength, is heartbroken when Hades reveals that Meg was working for him.
Hades unleashes the Titans, who climb Olympus and capture the gods, while a Cyclops goes to Thebes to kill Hercules. Hercules defeats the cyclops; Meg then saves him from a falling pillar and is mortally injured. This breaks Hades' promise that Meg would not be harmed, and allows Hercules to regain his strength. Hercules and Pegasus fly to Olympus where they free the gods and vanquish the Titans, though Meg dies before he returns to her.
With Meg's soul now Hades' property, Hercules breaks into the Underworld and offers to free Meg from the Styx in exchange for his own life. His willingness to sacrifice himself restores his godhood and immortality before the life-draining river can kill him; he rescues Meg and punches Hades into the Styx, where irate souls pull him under. After reviving Meg, she and Hercules are summoned to Olympus, where Zeus and Hera welcome their son home. However, Hercules chooses to remain on Earth with Meg in lieu of living on Olympus. Hercules and his friends return to Thebes, where they watch Zeus etch Hercules' image into the stars to commemorate his heroism.