Forced to run away from the jungle by the Hunter, Babar makes his way to the City only to find it just as dangerous and confusing. Motherless and alone, Babar is befriended by the Old Lady, who tries to teach him how to fit into her world, with his ultimate test at a society dinner in his honour.

As the Elephants' new King, Babar's first decree is to build a city for all the elephants. However, not only does Babar have to contend with the fact that Lord Rataxes is also trying to build a city, his own obsession to see his dream city completed on time creates insurmountable problems.

At an important palace ball, Babar's advisors Cornelius and Pompadour jeopardize Babar's relationship with Celeste by forcing Babar to take the visiting dignitary's daughter to the dance instead of her.

Babar's hopes of rebuilding an old theater dedicated to his mother are jeopardized when all his subjects get caught up trying to build a rocketship in a silly attempt to beat Lord Rataxes to the moon.

When Babar's crown goes missing, amateur sleuth Zephir decides to help Babar solve the mystery. However they both get panicky when all the clues point out that Babar's closest friends stole the crown as the first step to taking over his kingdom.

When Babar discovers that the ‘Phantom' in an abandoned theater is really a lonely Old Musician who lives there, Babar decides to try and help him come out of seclusion. Unfortunately, the Phantom resents the meddling and scares Babar's friends away to the point where they decide the theatre should be torn down.