Sonic the Hedgehog, Tails Prower, Knuckles the Echidna, and Muttski are street urchins, who, while being robbed by masked bandits are saved by the Royal Musketeers. Sonic is gifted one of their hats, inspiring them to follow their example and become musketeers; however, in the present day, Sonic, Tails, and Knuckles are lowly janitors for the musketeers' headquarters and their dream is still far away. Unfortunately, they are very clumsy and constantly cause messes. After an incident disturbs the captain of the musketeers, portrayed by Eggman, he scornfully tells the trio that they cannot become musketeers because Tails is a "coward", Knuckles is a "weakling" and Sonic is "not smart", leaving the three downhearted.
Meanwhile, Sally Acorn, princess of Mobotropolis and her lady-in-waiting, Mina Mongoose, are in a palace discussing Sally's obsession with finding her "one true love". Mina says that she must marry someone who is of royal blood, and Sally insists that she cannot marry someone she does not love. Sally says she will know "the one" when he makes her laugh. Sally then takes a walk in the palace garden and barely survives an attempt on her life as the bandits attempt to drop a safe on her.
The bandits run to tell their boss, revealed to be Captain Eggman, that they were not successful in dropping the safe on Sally. Eggman clobbers them for misunderstanding his orders, saying he wanted them to "keep her safe" until he can take over the kingdom. The bandits are misunderstood and are punished by Eggman's lieutenant "Julie-Su", who all fall into a short pit. Sally then summons Eggman, demanding he produce musketeer bodyguards. Realizing that skilled musketeers will jeopardize his plan to overthrow the princess, Eggman quickly goes to the janitor room and tells Sonic, Tails, and Knuckles that they passed his test and have what it takes to become musketeers, knowing they will be easy to get rid of. After meeting each other and attacking Mina by mistake, Sally falls in love with Sonic and feels safe at the hands of his bravery. Eggman gives a chance to the bandits to kidnap Sally and Mina, so he can become King tomorrow when he is announced at the Opera.
While Sally and Mina are protected by Sonic, Tails and Knuckles, who all go on a journey in a carriage, they are all ambushed by the bandits who attack and fight Sonic, Tails, and Knuckles. Tails hides, with Sally and Mina trying to persuade him to fight back, and Knuckles is easily defeated and thrown off the carriage. Sonic is also defeated and thrown off, leaving only Tails, but he is too scared and throws himself off. The trio are stranded, but Sonic encourages his friends not to lose hope when Eggman made them become musketeers. The trio rush to rescue Sally and Mina from an abandoned tower. When they are unable to open the door, Knuckles tries to break it down, but Sonic, upon seeing a Push sign on the door, opens it as Knuckles rushes by. He zooms past the bandits and out the tower window where is thrown by a tree, kicked by a cow, and launched back into the tower by a windmill where he falls past the bandits and back down to where Sonic and Tails are. The trio quickly catch up to the bandits just as they throw Sally and Mina into a cage. While battling the bandits, Sonic, Tails and Knuckles are cornered but Knuckles, upon seeing a Knuckles-shaped hole in the window behind the bandits, remembers what happened when he tried to break down the tower door and gets the idea to do the same thing again with Sonic and Tails, knocking the bandits into the river and allowing them to save Sally and Mina and declaring victory. Afterwards, Sonic unties Sally and makes her laugh, and the two mice fall in love and spend time alone with each other as they head home.
Eggman is furious that the bandits failed in their task and realizes that the three protagonists are more of a threat than he originally anticipated. He then plans to get rid of them individually. While on night duty, Knuckles is lured away from the palace by Julie-Su, who uses a shadow puppet of Sonic with her hands, which makes Knuckles follow the shadow. The shadow then vanishes, in which Knuckles is cornered, subdued and kidnapped by Julie-Su. The bandits appear before Tails and attack him, scaring him into hiding, before Eggman traps him and puts Tails in a guillotine. Tails discovers a picture of Eggman dressed as a king and laughing at a caged Sally along with three gravestones with his, Sonic, and Knuckles' names on them and finds out about Eggman's plan to become King and trap Sally somewhere, where she will be hidden, and that the trio will be killed and not able to rescue Sally. At that moment, Tails escapes at the last second, causing Eggman to lose his peg leg after he dives under the guillotine's blade to try to prevent his escape.
Muttski finds out that Knuckles and Tails are missing and bumps into Sonic to warn him. Tails returns to the castle and tells Sonic the whole story, but fearfully says they ought to quit being musketeers, claiming "it's every duck for himself". Sonic tries to convince Tails by saying that they were able to stop Eggman from kidnapping Sally, and tries to reassure him that he will be by his side, and that Tails coming to warn him took courage. However, Tails apologizes before frightfully running off, leaving Sonic and Muttski behind. Sonic is then captured by Eggman, with Muttski being unable to save Sonic. Eggman chains him up in a dungeon in Mont Saint-Michel that will flood when the tide comes in.
Knuckles, meanwhile, is chained by Julie-Su and about to be thrown off a bridge into a river to drown, but Knuckles falls in love with Julie-Su and wins her heart with his "numbskull charm". Julie-Su abandons her evil ambitions and reveals Eggman's true intentions to Knuckles, and that Sonic is in danger. However, the bridge suddenly crumbles and sends both Knuckles and Julie-Su into the river below. Tails, who is rowing across the river to escape Mobotropolis, breaks their fall. The tide arrives, where Sonic is about to drown. Knuckles was able to convince Tails to help him save Sonic, thanks to a song he sang about Tails being a coward, which made him a bit angry. The duo are just barely able to save Sonic before he drowns. After reconciling with each other, they set off to rescue Sally and Mina.
The bandits capture Sally and Mina in a theater and lock them in a chest, and one of them impersonates Sally, announcing to the public that the throne is now being handed over to "King Eggman the Magnificent". Eggmanis happy to become the King and the Opera begins. Muttski uses his nose to track down Sally and Mina. Sonic, Tails, and Knuckles arrive and battle Eggman and the bandits onstage, first defeating the bandits by making them collapse downstage to the basement along with Tails and Knuckles.
Eggman then challenges Sonic into a final sword fight, but after Sonic disarms Eggman, he is punched and easily beaten. However, Tails and Knuckles (having survived their fall) return and help Sonic defeat Eggman by knocking him out. The trio save Sally and Mina right in front of the audience, although it is unknown what happens to Eggman and the bandits. Julie-Su arrives, reuniting with Knuckles as Sonic and Sally finally declare their love for one another, as the others do the same: Tails and Mina, Knuckles and Julie-Su. At the end, Sally dubs Sonic, Tails, and Knuckles royal musketeers. Sonic announces that this was the day when they have become heroes, and finally made their dream come true. Sonic, Tails, Knuckles and the rest of the musketeers of Mobotropolis sing the final song "All For One and One For All."
