New York City investigative journalists Kermit the Frog and Fozzie Bear, along with their photographer, The Great Gonzo, are fired from The Daily Chronicle for failing to report a major story about the theft of Lady Holiday’s diamonds. To redeem themselves, the three fly to England to interview Lady Holiday, known as “the fashion queen of London.” However, the newspaper refuses to cover their expenses, and they must travel on the cheap in the plane’s cargo hold. Arriving in London, they check into the Happiness Hotel, a bargain accommodation where the bellhops are rats. Despite the hotel’s run-down appearance, they receive a warm welcome from the eccentric guests. Meanwhile, aspiring fashion model Miss Piggy accepts a job as Lady Holiday’s receptionist after being rejected as a runway model. When Kermit arrives at the office, Miss Piggy is sitting at Lady Holiday’s desk while her boss is away, and Kermit mistakes her for the famous fashion designer. Immediately smitten with Kermit, Miss Piggy does not divulge her real identity, and Kermit arranges a date to interview her that evening. As Fozzie and Gonzo help Kermit get ready, they persuade their friend to bring them along. Meanwhile, Miss Piggy, who has told Kermit she lives at Seventeen Highbrow Street, sneaks into the luxurious townhouse there in time to answer the door as he rings the bell. When Neville, the owner of the house, catches them, Miss Piggy addresses him as the butler and asks for a restaurant recommendation. He suggests the Dubonnet, a supper club. Outside, she is taken aback that Kermit is accompanied by Fozzie, Gonzo, and the other Happiness Hotel guests, who have arrived in a decrepit double-decker bus to pick her up. At the swanky Dubonnet, Kermit gasps at the menu prices, but enjoys a romantic dance with Miss Piggy. Wearing an expensive diamond necklace, the real Lady Holiday arrives with her ne'er-do-well brother Nicky, who has conspired with three disgruntled Holiday models, Marla, Carla, and Darla, to steal his sister’s jewels that evening. Lady Holiday is surprised to see her new receptionist on the dance floor. Nicky is instantly attracted to Miss Piggy and attempts to dance with her. When the lights of the club suddenly go out, Nicky grabs the jewels from his sister’s neck and tosses them to one of the models. In the commotion, Kermit learns of Miss Piggy’s deception, and she escapes the club. Back at the hotel, Gonzo develops a photograph he took revealing Nicky as the jewel thief, but the evidence is ruined when the door of the makeshift darkroom is opened, exposing the picture. Sitting on a park bench, Kermit is melancholy as he holds a glass slipper Miss Piggy left behind at the club. When he coincidentally encounters her by the duck pond, he conveys his anger about the deceit. However, Miss Piggy charms him into forgiving her, and they go on a bike ride together. Later, Lady Holiday, the models, and Miss Piggy are busy backstage preparing for a fashion show. Nicky is also there and invites Miss Piggy to dinner. When he attempts to kiss her, she resists his advances and is pleased as Kermit interrupts them. Nicky schemes with Marla, Carla, and Darla, to frame Miss Piggy for the jewel theft. During the runway show, Marla pretends to twist her ankle so Miss Piggy can replace her. As Miss Piggy models the swimwear collection, the audience gives her a standing ovation. However, she accidentally falls into a fountain near the runway while fantasizing about starring in a water ballet show. Miss Piggy sneezes from the cold, and Nicky has a coat ready to wrap around her shoulders. Reaching in the coat pocket, she discovers Lady Holiday’s necklace, minus the diamonds. The designer accuses her receptionist of stealing the precious stones, and Miss Piggy is arrested. Lady Holiday, meanwhile, assures the press that her most famous jewel, the “Baseball Diamond,” is secured at the fortress known as the Mallory Gallery where it will be on permanent display. Backstage, Gonzo overhears Nicky conspiring with the models to steal the Baseball Diamond tomorrow at midnight. Kermit and Fozzie convince the other guests at the Happiness Hotel to help free Miss Piggy and catch the real thieves. Dressed as a lawyer named Rosenthal, Kermit visits Miss Piggy in jail and informs her of their plans. However, she is skeptical that the “clowns” from the Happiness Hotel can succeed, and later that night escapes from jail. She steals a truck and drives to the Mallory Gallery. When the truck breaks down, she continues on a motorcycle. Meanwhile, Nicky and the three models, equipped with high-tech gear, scale the outside wall and enter the gallery from the roof. At the front gate, Kermit and Fozzie distract the guards with a pizza delivery as the rest of their team slips into the property. When guard dogs attack, Kermit and his friends panic and quickly climb the wall to the roof. From a skylight, they look down into the gallery that houses the Baseball Diamond and see Nicky and the models. Continuing to improvise, Kermit and his friends form themselves into a Muppet ladder and surprise the criminals below. Like a real baseball, the diamond is tossed around until Nicky pulls a gun and grabs Kermit. Suddenly, Miss Piggy breaks through a gallery window on her motorcycle, topples Nicky, and subdues the models with karate-chops. As the heroism of Kermit, Miss Piggy, and their friends makes front-page headlines, the group flies home to America, compliments of The Daily Chronicle.