'Sesame Street' star Elmo begins his first movie adventure by selfishly refusing to share his beloved blue blanket with Zoe. This leads to a tug-of-war which sends the blanket flying off to a faraway place. When Elmo gathers up the courage to go and rescue the blanket, he soon finds himself in Grouchland, a place where everybody and everything is moody and selfish. The 'Sesame Street' characters joining Elmo in this adventure include Bert and Ernie, Big Bird, and, of course, Oscar the Grouch.