The film begins in a Kingdom of Trolls, where Stanley (Dom DeLuise) has a magical green thumb with the ability to bring flowers and plants to life at a touch. When he is discovered doing so, the other trolls take him as prisoner to Gnorga (Cloris Leachman), the Queen of the Trolls, who concludes that Stanley "gives a bad name to trolls everywhere" and demands that he be turned to stone. At the behest of her consort King Llort (Charles Nelson Reilly), Gnorga instead banishes Stanley to Central Park where, after a series of mishaps, Stanley hides himself under a bridge. In New York City, two young siblings named Gus and Rosie (Phillip Glasser and Tawny Sunshine Glover) learn that their father Alan (Jonathan Pryce) and mother Hilary (Hayley Mills) cannot take them to Central Park. while left alone with their nanny, Maria, Gus takes Rosie to the Park himself. While playing with Gus's toy boat, which is later accidentally smashed, Rosie befriends Stanley. When Queen Gnorga discovers Stanley happy in exile, she creates a flood to drown them by making Gus cry, but Stanley enlarges Gus's toy boat to escape. Soon after, Stanley shows the children his own ideals, depicted as a world of his own...