Jafar, Grand Vizier to the Sultan of Agrabah, is attempting to access the Cave of Wonders for a magical oil lamp containing a genie. He and his talking parrot, Iago, (along with V.V. Argost and Fuzzy Lumpkins) learn that only the metaphorical "Diamond in the Rough" can enter the cave.
As Team Isberto enter Agrabah, Cyborg tells the rest that there are shops at the marketplace before Ian thinks of buying something for Blossom. Along the way, they see Aladdin escaping the guards right before they even meet him.
Jasmine, the Sultan's daughter, frustrated with "having her life lived for her" and the obligation of marriage, goes to Agrabah's marketplace. She meets street urchin Aladdin and his monkey Abu, along with Team Isberto, who show her around the marketplace. Jafar, using a machine, and Argost and Fuzzy discover that Aladdin is the "diamond in the rough" and Team Isberto are with with him, and have them captured. Jasmine orders them released, but Jafar lies, telling her Aladdin, Ian, and the others are dead.
Jafar, disguised as an elderly man, releases Aladdin, Ian, and the gang from prison and leads them to the Cave of Wonders. The tiger-shaped head of the cave tells them to touch nothing but the lamp. Aladdin, Ian, and their friends enter the cave and encounter a magic carpet before finding the lamp. Abu tries to steal a ruby which causes a cave-in, but the carpet helps them to the entrance. Jafar tries to kill Aladdin after getting the lamp, but Abu bites Jafar and takes the lamp back. Abu, the carpet, Aladdin, Ian, and the others fall back into the cave just as it collapses.
When Aladdin awakens, he rubs the lamp, unleashing the Genie who reveals he will grant Aladdin three wishes. Aladdin, Ian, and the others dupe Genie into freeing them from the cave and on an oasis without using up a wish. While contemplating his wishes, Aladdin asks Genie's opinion. Genie admits he would wish for freedom, since he is a prisoner to his lamp. Aladdin promises to later wish him free. For his first wish, Aladdin asks to become a prince so he can marry Jasmine.
Jafar plans to trick the Sultan into marrying Jafar to Jasmine, then kill both of them. His plans are interrupted when Aladdin parades into the Sultan's palace as "Prince Ali". Team Isberto are with him as well. Jasmine rejects him, considering him a buffoon. That night, Aladdin meets Jasmine, and takes her on a magic carpet ride. Jasmine realizes that Ali is the boy from the marketplace; Aladdin fabricates a story that he sometimes dresses as a "commoner" to escape palace life. Aladdin returns her home and they kiss.
After delivering Jasmine, Aladdin, and Team Isberto are captured by Jafar who orders the guards to chain Aladdin, Ash, and the others and throw them into the ocean. Aladdin, and Team Isberto summon Genie, who rescues Aladdin, Ash, and the others as his second wish. Aladdin, and Team Isberto return to the palace, revealing the vizier's plot to Jasmine and the Sultan. Jafar realizes Aladdin, and Team Isberto's identities, and escapes from the Sultan's bodyguards. Surprised by Aladdin's bravery, the Sultan decides Aladdin should be his successor. Aladdin faces a moral dilemma, and decides to wait before wishing Genie free. Iago and Fuzzy steal Genie's lamp (before Dexter goes after them) and bring it to Argost, and Jafar, who uses his first wish to become sultan,. Jafar's second wish turns him into a powerful sorcerer sending Aladdin Abu & The Others to a far-off place.
Aladdin, Abu, And The Others use the magic carpet to return to Agrabah. Jasmine distracts Jafar as Aladdin & Ian attempts to steal the lamp, but the vizier & The bad guys notices. During the battle, Jafar transforms himself into a giant snake. Jafar boasts that he is "the most powerful being on Earth", Aladdin & Ash reminds him Genie is more powerful. Jafar uses his final wish to become a genie but forgets that genies are not free entities. Jafar is sucked into his new black lamp, dragging Iago with him. Genie flicks the lamp into the Cave of Wonders and also flicks Argost and Fuzzy back to where they belong.
Aladdin wishes for Genie's freedom, much to Genie's surprise and happiness. Since Jasmine loves Aladdin, the Sultan changes the law so they can marry. Genie leaves to explore the world while Aladdin and Jasmine celebrate their engagement.
- V.V Argost and Fuzzy Lumpkins are working for Jafar in this film.
- Blossom (Leader of the Powerpuff Girls/"The Smart One"/Ian's Girlfriend) is mentioned when Team Isberto arrive in Agrabah.