In a hilarious twist of fate, investigative reporters Kermit the Frog and Fozzie Bear, played by Robert Morley and Jim Henson respectively, suddenly find themselves in the middle of a chaotic escapade after being dismissed from their job at the Daily Chronicle for flubbing a major jewel theft story. With their careers hanging in the balance, Kermit approaches his editor, Mr. Tarkanian, seeking a chance at redemption. His proposal? A trip to London to investigate the very robbery they had misreported and to interview the victim, the illustrious fashion designer Lady Holiday.
However, their quest is complicated by a meager budget of only $12, prompting them to engage in some rather creative solutions for transportation. Enter their trusty photographer, Gonzo the Great, portrayed by Dave Goelz, who cleverly manages to sneak them into an airplane's cargo hold for the long flight to Britain. Unfortunately, their adventure takes a wild turn when both Kermit and Fozzie are unceremoniously ejected mid-flight and find themselves landing in the British countryside.
Upon arrival, they take refuge in the rundown but free Happiness Hotel, where they are welcomed by an eclectic ensemble of Muppet characters. Among their new roommates are Diana Rigg as the stunning Lady Holiday and Charles Grodin as her charming, but cunning brother Nicky, as well as a host of familiar faces like the Swedish Chef and Dr. Teeth. The following morning, Kermit pays a visit to Lady Holiday's office, but instead mistakenly falls for her gorgeous receptionist, Miss Piggy, who flamboyantly impersonates Lady Holiday, eager to win the little green reporter's heart.
Their dinner date at the posh Dubonnet Club reveals an unexpected twist as the real Lady Holiday's exquisite necklace gets stolen by Nicky and his fashion model accomplices: Carla, Marla, and Darla. When Miss Piggy's deception is exposed, she makes a quick escape, leaving Kermit behind to deal with the fallout. Despite Gonzo capturing photographic evidence of the heist, misfortune strikes as the film gets ruined, putting a damper on their hopes for justice.
In an emotional park encounter, Kermit and Miss Piggy attempt to patch things up, but Nicky's insatiable infatuation with Miss Piggy drives him to set her up as the prime suspect for the necklace's theft during Lady Holiday's fashion show. Their plan to betray Miss Piggy is nearly flawless until Gonzo's intense listening skills catch wind of their upcoming scheme to steal an even more valuable gem: Lady Holiday's dazzling Baseball Diamond, currently on display at the Mallory Gallery.
Determined to clear Miss Piggy's name, Kermit and Fozzie enlist the help of their fellow Muppets to thwart Nicky's plans. They hatch a bold scheme to infiltrate the gallery, where Dr. Bunsen Honeydew employs his clever inventions to disable the security system, often with entertaining results involving Richard Hunt as Beaker. As the chaotic chase unfolds, Nicky manages to capture Kermit at gunpoint just as Miss Piggy, fresh from a daring escape, crashes through the gallery windows on a motorcycle, unleashing a barrage of karate chops on Nicky and his gang.
With the arrival of the authorities, Miss Piggy is exonerated, and Nicky and his cohorts are apprehended. As the dust begins to settle, our beloved Muppets prepare to make their inevitable return journey. Using their unconventional methods again, they find themselves parachuting back to solid ground, eagerly recalling the laughter of their recent exploits. Before the curtain falls on this uproarious adventure, Gonzo gets the chance to snap one last picture of the delighted audience – vowing to send each viewer a keepsake of this unforgettable experience, ensuring a lasting connection between the Muppets and their fans.
