In the quaint town of Husavik, Iceland, Lars Eriksson (Will Ferrell) and Sigrit Eriksdóttir (Rachel McAdams), childhood friends with a passion for music, form a duo known as Fire Saga. Their artistic aspirations are met with skepticism, especially from Lars' father, Erick (Pierce Brosnan), who is weary of their musical ambitions. Lars, however, is driven by a singular dream: to win the Eurovision Song Contest. Despite their heartfelt performances, the local audience remains fixated on a cheeky tune, "Ja Ja Ding Dong," much to the dismay of the duo.
Compounding matters, Sigrit's mother expresses her concern, believing that Lars is hindering Sigrit's potential, particularly in hitting the elusive "Speorg Note," a note only attainable through authenticity. Amidst financial struggles, Erick considers selling their family home and urges Lars to move on from his musical dreams.
Fortune smiles upon Fire Saga when they are unexpectedly chosen to participate in Songvakeppnin, Iceland’s preliminary contest for Eurovision. Their excitement is met with a comedic twist when Lars is arrested for ringing the bell tower in celebration. Thanks to Sigrit's charm, they manage to secure his release from the crush-stricken policeman, Arnar (Björn Hlynur Haraldsson). As their journey unfolds, Sigrit, a believer in Icelandic folklore, seeks the help of elves to bring their dreams to fruition, hoping to capture Lars' affection in return.
Their ambitious foray into Songvakeppnin, however, ends in disaster due to technical issues, allowing the striking Katiana Lindsdóttir (Demi Lovato) to claim victory. In a startling twist of fate, a tragic explosion during a celebratory boat party leaves only Fire Saga standing, thrusting them into the Eurovision finals in Edinburgh, Scotland. They grapple with the demands of the competition, including an unexpected rivalry with the charismatic Alexander Lemtov (Dan Stevens) and a chaotic stage presence.
Challenges mount as misunderstandings arise between Lars and Sigrit, further exacerbated by their personal insecurities. Following a string of mishaps during their performance, both begin to question the viability of their partnership—both as a band and in love. The emotional tension reaches a breaking point when Sigrit discloses that the song she was penning was composed for Lars, shattering his misconceptions and reigniting their bond.
Determined to reclaim their dreams, Lars embraces the magic of their hometown, confronting his feelings and rekindling their musical connection. The grand final showcases their original composition, "Husavik," spotlighting the rich culture and stunning landscapes of Iceland. The heartfelt performance resonates deeply with the audience, culminating in a passionate kiss that celebrates their journey and rekindled love.
Despite being disqualified for changing their song mid-performance, the essence of their relationship emerges victorious over the competition itself. The film concludes with a heartfelt montage as Lars and Sigrit return to Husavik, performing at their parents' wedding, surrounded by a community that supports them through their musical aspirations and personal journeys.
