When a busload of tourists stops at the Great Pyramid of Giza in Egypt, a boy named Justin accidentally falls onto it to discover that it has been stolen and replaced by an inflatable rubber duplicate. News of the theft shocks and puzzles the world.
In the middle of a suburban neighborhood sits a black house with a dead lawn. Unbeknownst to the neighbors, hidden deep beneath this home is the vast secret hideout of the supervillain Gru (Mike Pollock) and his army of "minions," (Jason Griffith) which are tiny yellow pill-shaped humanoids in overalls and goggles. When he learns of the Pyramid theft, his pride is badly wounded and he resolves to pull the biggest heist in world history: stealing the Moon. Gru tries to get a loan from the local Bank of Evil (formerly Lehman Brothers), where he meets a new young supervillain named Vector (Ted Lewis). While Gru is reading the blueprints for his Moon heist rocket, Vector annoys him by talking about his name and saying that it was him who stole the pyramid. Mr. Perkins (???), the bank president, refuses to give Gru a loan until he obtains the shrink ray necessary for the plan. As Gru leaves the bank, he shoots Vector in the head with his freeze ray while he is busy reloading his piranha launcher.
Gru and his minions steal the shrink ray from a secret lab in East Asia, but Vector promptly steals it from him and shrinks his ship as revenge for freezing his head; Gru attempts to get it back, but is unable to get inside Vector's lair. After seeing three orphaned girls named Margo (???), Edith (???), and Agnes (Kate Higgins) get into Vector's lair to sell cookies, Gru adopts them in order to use them to steal back the shrink ray. Vector has placed a large cookie order, and Gru has his assistant, Dr. Nefario (???), build several cookie-shaped robots to slip into the boxes. The cookie robots are designed to infiltrate Vector's lair and help steal the shrink ray from Vector's vault. The theft nearly fails when the robots seal Gru inside the vault, but he and his minions eventually escape through the main entrance.
On the way home, the girls ask to go an amusement park called Super Silly Fun Land; Gru agrees to take them, intending to leave the girls there, but is forced to ride the roller coaster with them, and bonds with them during the trip. Back at home, he fine-tunes his plan and presents it to Mr. Perkins, who surprises him by again refusing him the loan; Perkins saw the girls. Perkins then tells Vector (revealed to be his son Victor, who named himself after the mathematical term) that Gru has the shrink ray. Though Gru is ready to abandon his plan due to lack of funds, the girls and the minions take up a collection to keep it going. Miss Hattie (???), the girls' mistress from the local orphanage, arrives to take the girls back to the orphanage after Nefario contacted her, as he began to see the girls as a distraction, breaking Gru's heart.
The heist falls on the same day that the girls are to participate in a ballet recital. Gru shrinks the Moon, pockets it, and rushes back to Earth only to find that the recital has ended. In the seat that the girls reserved for him, he finds a note from Vector, who has kidnapped the girls, telling him to bring the moon. After forcing Gru to hand over the moon, Vector goes back on the deal and keeps the girls as his captives. This enrages Gru, who storms Vector's lair, Vector's defenses proving useless. Vector then leaves his lair in an escape pod with the girls still inside. Gru accompanies them and nearly falls back to Earth, but is rescued by Dr. Nefario, who reveals that the effects of the shrink ray are not permanent, and increased size before shrinking will make the effects wear off faster (which he calls the "Nefario effect"). As Gru gives chase to Vector, the effects of the shrink ray on the Moon wear off, causing the Moon to grow and smash open the cell holding the girls. Gru rescues them with the help of his minions, while the (rapidly-expanding) Moon wrecks Vector's controls, causing his ship to carry the moon back into orbit.
Gru and the girls settle down to live a happy life as a family, while Vector is stranded on the Moon with a minion that drank a sample of anti-gravity serum and floated out of the lab after Nefario forgot to close the skylight. The girls give a special recital for the minions, Gru, and his mother (Linda Young), who, after years of neglecting her son, finally tells him she is proud of him. The music changes and everyone present rushes onstage to dance.