The film opens with Mia Thermopolis (Anne Hathaway), Crown Princess of Genovia, graduating from Princeton University's Woodrow Wilson School. Mia, Joe (Héctor Elizondo), and Fat Louie flies to Genovia for Mia's 21st birthday and for her to take her grandmother, Clarisse Renaldi's (Julie Andrews) place as Queen of Genovia. At her birthday ball, she has to dance with all the eligible bachelors. She accidentally steps on a mysterious young man's shoe and dances with him. When Mia's tiara falls off Viscount Mabrey (John Rhys-Davies) catches it and it is revealed that he's planning to steal her royal position.
Later, Viscount Mabrey mentions another heir to the crown, his nephew Lord Devereaux (Chris Pine). Mia cannot be Queen unless she gets married in 30 days. Clarisse invites Lord Devereaux to stay at the palace and Mia is shocked when she sees he is the man she flirted with at the ball, Lord Nicholas Devereaux. Mia is joined with her best friend Lily Moscovitz (Heather Matarazzo) and later they search the possible husband. Mia chooses Andrew Jacoby (Callum Blue), Duke of Kenilworth and days later they are engaged. Mabrey and Nicholas plots against the engagement and so Nicholas starts flirting with Mia.
Princess Mia starts to practice firing a flaming arrow as part of the ceremonies for when she is crowned Queen. At a garden party, Mia gets annoyed seeing Nicholas with Lady Elissa. They argue near an isolated fountain and Nicholas suddenly kisses Mia. After that Nicholas gets second thoughts about stealing the crown and Mabrey realises that Nicholas has fallen in love with Mia. Later, Mia is practicing archery when Nicholas tells her that he's leaving, but he wants to meet Mia for the last time. Mia is upset, but agrees to meet him. They go to the lake, dance and fall asleep. When they wake up, Mia sees a man in a boat videotaping them. Mia thinks Nicholas set her up and storms off. When she gets back home, the video has already been broadcasted on TV. She apologizes to the disappointed Andrew, but he still wants to marry her.
When Mabrey leaves for the wedding, Nicholas is debating on whether he should go also. Gretchen tells him that his uncle set up what happened at the lake. Nicholas leaves for the ceremony on his grandfather's penny-farthing bike, the only means of wheeled travel available. Meanwhile Mia is walking down the aisle, but runs out realizing she can't marry Andrew. Clarisse goes after her and tells her not to make the same mistake she did and give up finding love. Mia walks back inside, saying she wants to become Queen without a husband, but Mabrey says his nephew should be King. Nicholas declines the crown, Parliament votes and the law is changed. Clarisse asks Joe for his hand in marriage and they get married. Mia becomes Queen, but not before Nicholas confesses his love for her.