The young dragon TABALUGA lives along with his best friend BULLY the ladybird and his foster father, KOLK the raven, in idyllic Greenland. It could all be so perfect, but Tabaluga is not able to breathe fire, and without his fire he does not feel like a real dragon.
Arktos, the evil ruler of Iceland wants to eliminate all dragons and therefore lures Tabaluga into his kingdom. Bravely Tabaluga and Bully set off on an adventurous journey. In Iceland they meet the beautiful Princess Lilli. It is her love that finally enables Tabaluga to breathe fire.