As children, Prince Derek and Princess Odette are forced to spend their summers together by their widowed parents, who hope that the two will eventually fall in love and marry, so that the kingdoms of the two will be united. As children and adolescents, Derek (McGillin) and Odette (Nicastro) can't stand each other, but as young adults they begin to see each other in a different light and fall in love with each other. But one night things take a bad turn when Derek unintentionally offends Odette, who then refuses to marry him if he can't prove that he loves her for who she is and not just her beauty. Odette and her father are then attacked by Lord Rothbart (Palance), a vengeful sorcerer who was cast out of William's kingdom when he plotted against the king. In the form of a "Great Animal," Rothbart severely wounds William, and kidnaps Odette.
King William's Captain makes it back to Derek's castle to tell them that they were attacked by a Great Animal. When Derek rides off to the scene of the attack, he finds King William on the ground. Before he dies from his injuries, he tells Derek about "the Great Animal... which is not what it seems".
Rothbart has placed a spell on her that turns her into a swan during the day, and she can only regain her human form when the moonlight touches the lake to which she is bound. Only a vow of everlasting love from Derek can set her free, or marrying Rothbart, thus giving him her father's kingdom.
While everyone else believes Odette is dead, Derek refuses to give up hope and sets out to find his true love, which involves a hunt for the Great Animal. With the aid of a patient turtle, an Irish puffin and a slightly delusional, love struck frog (who thinks that a kiss from a beautiful maiden will turn him "back" into a prince), Odette manages to get Derek to the lake, where he sees her resume her human form. With Rothbart approaching, Odette urges Derek to escape after explaining the spell to him, and he tells her to come to a ball his mother is preparing, and there he will make the vow before the world that will set her free. But Rothbart has already caught on to their plan and, taking advantage of the fact that the night of the ball will have no moon, he locks Odette in his castle and then transforms his hench-woman into the form of Odette to send to the ball, so that when Derek makes the vow to her instead of the real Odette, Odette will die.
Despite the efforts of her animal friends to get her out of the castle, Odette is too late to get to the ball to warn Derek, who is tricked into making his vow to the wrong girl, thus setting in progress Odette's death. Rothbart then shows up to gloat about his victory, sending Derek on a mad rush to get to Odette, whom he finds dying by the lake. Rothbart then challenges Derek to a duel to save Odette's life, and transforms himself into the Great Animal. With some help from his friend Bromley, Derek manages to kill Rothbart with an arrow shot as Rothbart's Great Animal form falls toward the lake and explodes. At first it appears that Odette is still lost, but after Derek professes his love and admiration of her compassion and soul, Odette reawakens. The two are then married, and they live happily ever after.
