The film opens as Raya (Kelly Marie Tran) is riding her giant pet Tuk Tuk (Alan Tudyk) through a desert wasteland. She explains through narration that 500 years earlier, the land was once known as Kumandra, which was prosperous and thriving. There even lived dragons with magic powers among the people. Soon, sinister spirits known as the Druun came alive, causing people to turn to stone and growing stronger with each person they consume. The dragons used their magic to create the Dragon Gem, entrusting it to their young sibling Sisu (Awkwafina), who used the Gem to vanquish the Druun and seal them away, but all the other dragons turned to stone and did not return when the humans did. The people of Kumandra sought the Gem’s power, leading to them splitting into five separate clans – Tail, Talon, Fang, Spine, and Heart.

Centuries later, a young Raya is with Tuk Tuk entering the temple where the Heart clan (which she is part of) is keeping the Dragon Gem. After getting through the booby traps, Raya finds herself facing an adversary guarding the Gem. She briefly spars with him until it is revealed that this man is her father, Chief Benja (Daniel Dae Kim), leader of the Heart clan.Benja hosts a feast to unite the other clans and potentially revive Kumandra as it once was. When the other four clans arrive, Raya approaches Namaari (Jona Xiao), daughter of the Fang clan’s Chief Virana (Sandra Oh). The girls appear to become friends just as the clans gather for the feast. Raya and Namaari express their admiration over the dragons, with Namaari gifting Raya with a necklace of Sisu. Raya then brings Namaari to show her where they keep the Dragon Gem, but this was Namaari’s plan all along as she was using Raya to get close to the Gem so Fang can have it. The other clans storm into the temple, but despite Benja’s attempt to keep them calm, the clans start fighting for the Gem until it is dropped and shatters. This causes the Druun to come back and begin attacking, turning people to stone. As Raya and Benja flee, he notices that the Druun are repelled by water. Members from the clans grab pieces of the Gem as they run, with Benja taking one piece and giving it to Raya. Knowing that the Druun are getting closer, Benja entrusts her with the Gem piece and to get to safety. He throws her off the bridge into the river just before he is turned to stone.

Six years later, Raya and Tuk Tuk make their way into the Tail land. She has spent the last few years searching for the other Gem pieces but to no avail. Raya and Tuk Tuk come across a crashed ship with a trail of water leading into it. Raya enters and calls out to Sisu, tearfully begging her to come back to help her. The water...