Stitch is held captive on a spaceship above Earth by an alien faction called the Jaboodies, who want to use him against his own will to win a space war against their enemies, the Woolagongs. However, the Woolagongs themselves attack the ship wanting Stitch for themselves, accidentally freeing him in the process during the fight and allowing him to escape back to Earth. Upon re-entering Earth's atmosphere, Stitch lands in China's Huangshan mountains where he meets orphaned Chinese girl Wang Ai Ling. Her aunt Daiyu has told her that she will be forcibly moved out of her mountain home and separated from her older sister Jiejie to live in a city. The two quickly bond as the girl shows the blue alien around the mountains. Stitch desires to find a shrine he's been seeing in visions he had, but once Ai takes him to a shrine that does not match the one in his visions, they soon find themselves pursued by both alien factions. Ultimately, Stitch and Ai lead them on a goose chase around the mountains, causing a number of both factions' soldiers to be knocked out and forcing them to teleport away to regroup. When Stitch and Ai finally arrive at the latter's house, Daiyu sees the unusual and "ugly" Stitch and freaks out, calling for Jiejie, but when she turns her back, Stitch curls into a ball and Ai pretends to be playing with the blue "ball". After Jiejie brings Daiyu back inside, Stitch then tells Ai that the two of them will find a way to get her to stay in the mountains where she belongs.

Ai, who's happy to now have Stitch in her life, is ready to show her science class a strobe light she made. However, she and Stitch, who snuck into her school, find that her teacher has been possessed and mutated by a Woolagong sent to capture Stitch, leading to Stitch and Ai fighting the possessed teacher in the classroom. Meanwhile, at Mr. Ding's tea shop, Jiejie tries to convince Daiyu to not move Ai to the city, deciding to bring her to Ai's school to show that Ai is getting a good education there.

After Jiejie and Dahu head out, Stitch and Ai find they are being spied on by the Jaboodies' "spybots". Meanwhile, Jumba and Pleakley are ordered by the Grand Councilwoman—who knows about the "metamorphosis program" Jumba programmed in Stitch—to go to Earth and bring Stitch back before either the Jaboodies or the Woolagongs get him first. Once they arrive, however, they find that Stitch isn't willing to be taken away by anyone, even his old family.