Prince Eli of Mobotropolis possesses magical powers that allow him to control and create ice and snow, often using them to play with his younger sister, Sally. After Elias accidentally injures Sally with his magic, their parents, King Max and Queen Alicia, take both siblings to a colony of echidnas led by Guardian Athair. He heals Sally but alters her memories so that she forgets about Elias's magic. Guardian Athair warns Elias that he must learn to control his powers and that fear will be his greatest enemy. King Max and Queen Alicia isolate both siblings within the castle, closing the castle gates to their subjects. To protect his sister from his increasingly unpredictable powers, Elias ceases all contact with Sally, creating a rift between them. When the siblings are adults, their parents are killed at sea during a storm.
Following his 20th birthday, Elias is to be crowned king of Mobotropolis. He is afraid that the kingdom's citizens might find out about his powers and fear him. The castle gates open to the public and visiting dignitaries for the first time in years. Among them are the scheming Duke of Weselton and the handsome Prince Ken Khan of the Dragon Kingdom, with whom Sally falls in love at first sight. Elias's coronation takes place without incident, but she remains distant from Sally. Sally and Ken develop a romantic connection during the coronation festivities, and he impulsively proposes to her, but Elias objects when they seek his blessing. Hurt and confused, Sally protests, begging Elias to explain his fear and isolation. The emotional strain causes Elsa to accidentally unleash his powers before the court. Branded a monster by the Duke, Elias flees to the North Mountain, where he finally acknowledges his powers, building an ice palace to live a hermit life. In the process, his magic unintentionally engulfs Mobotropolis in an eternal winter.
Sally ventures out to find Elias and end the winter, leaving Ken in command. She gets lost, collecting supplies at Wandering Oaken's shop. She meets an iceman named Sonic the Hedgehog and his sled dog, Muttski, convincing them to take her to the mountains. An attack by wolves leads to Sonic's sleigh being destroyed. When Sally's horse returns to Mobotropolis without her, Ken sets out to find Sally and Elias, accompanied by the Duke's minions, who have secret orders to kill Elias. Reaching the ice palace, Sally meets Elias. When Sally reveals what has become of Mobotropolis, a horrified Elias confesses he does not know how to undo his magic. His fear causes his powers to manifest themselves once more, and he accidentally freezes Sally's heart, seriously injuring her. In desperation to keep Sally safe, Elias creates a giant snow monster named Marshmallow, who chases Sally and Sonic away. Realizing the effects of Elias's spell on Sally, Sonic takes her to the echidnas, his adoptive family. Guardian Athair reveals that Sally will freeze solid unless "an act of true love" reverses the spell.
Sonic races Sally back home so Ken can give her true love's kiss. Ken and his men reach Elias's palace; defeating Marshmallow (who falls into a chasm) and capturing Elias. Sally is delivered to Ken, but rather than kissing her, Hans instead reveals that he has actually been plotting to seize the throne of Mobotropolis by eliminating both siblings. Ken locks a heartbroken Sally in a room to die and then manipulates the dignitaries into believing that Elias killed her, but not before they were married. He orders the king's execution, only to discover he has escaped his detention cell. Sally is freed by Tails, her childhood talking snowmobian two tailed fox companion, and they venture into the blizzard outside to meet Sonic, who Tails has revealed is in love with her. Ken confronts Elias outside, claiming that he killed Sally, causing Elias to break down and abruptly stop the storm. Sally spots Ken about to kill Elias; she leaps in the way and freezes solid, stopping Ken. Devastated, Elias hugs and mourns over his sister, who thaws out, her heroism constituting "an act of true love".
Realizing that love is the key to controlling his magic, Elias ends the winter. Ken is arrested and exiled from the kingdom for his treason and attempted assassination, while the Duke's trade links with Mobotropolis are cut off. Sally gives Sonic a new sleigh and the two kiss. The siblings are reunited, and Elias promises never to lock the castle gates again.
