In Ancient China, Po Ping has a dream of bringing down the Blackhoof Boar Clan as the Dragon Warrior, the most powerful Warrior in the land, before his father Mr. Ping wakes him up for work at the family's noodle shop. The next day, the Tournament of the Dragon Warrior is held at the Jade Palace to determine which of the Furious Five (Tigress, Monkey, Crane, Viper, and Mantis) are worthy of being the Dragon Warrior. Attempting to view the tournament, Po lands in the center of the palace and is chosen as the Dragon Warrior.
As Po's training begins, Shifu receives word that Tai Lung, his former apprentice, escaped from prison and is coming for the Dragon Scroll, the key to ultimate power. Po, after napping inside the Palace, stops the Blackhoof Boar Clan from stealing treasures. Po and Crane are sent to Lotus Lake and find that the Golden Croc Gang have taken over and are demanding the villagers give up their egg hatchlings. Po rescues the eggs and the leader's grandchild after Crane saves him from the sergeant in a fierce chase.
Po and Shifu head to Wudang Mountains to find some relics of Master Oogway, but they discover that Great Gorilla and his soldiers have arrived first. While Shifu defends the Wudang Temple, Po grabs the relics and defeats Great Gorilla. Back at Lotus Lake, Po and Shifu save several villagers from the Croc Gang, who returned despite Po's interference. After their victory, Shifu tells Po that the Furious Five have gone to fight Tai Lung themselves and leaves Po to find his way back to the Jade Palace.
When Shifu arrives back at the Wudang Mountains, a Wolf Slasher tells him that Tai Lung has already defeated and captured the Furious Five. Shifu fends off the Lang Shadow Army and the rest of the Great Gorilla’s Army, rescues the Furious Five and sends them back to the Jade Palace. Po, wandering the Lands, is looking for his way back to the Palace, but not before stumbling upon Tai Lung's training grounds and finding the Lair of the Wu Sisters. He is able to invade the Lair and defeat the Wu Sisters and finds a map back to the Jade Palace.
At the Palace, Shifu fends off the rest of the Lang Shadow Army and confronts Tai Lung himself. Po, who learns about this from Mr. Ping upon his arrival in the village, goes to the palace to stop Tai Lung and save Shifu. In an attempt to comfort his son, Mr. Ping tells him that his secret ingredient soup has no secret ingredient and is only made special by his belief in it. Po realizes that the same applies to him and that he has to believe he's the Dragon Warrior. Po gets help from Monkey and heads for the Jade Palace. Tai Lung fights and defeats Shifu and demands he give up the Dragon Scroll. Shifu refuses, saying he'd rather die than give it to him. Po arrives in time and takes on Tai Lung himself. After a fierce duel, Po uses the Wuxi Finger Hold and defeats him. Afterwards, the Valley celebrates Po’s victory.