Jafar, a wicked wizard and vizier of the Middle Eastern city of Agrabah, seeks out the Cave of Wonders which holds a magic lamp, and, after his most recent attempt to enlist someone into entering fails, is told that only a "diamond in the rough" can enter, later identified as the young street thief Aladdin. Meanwhile, Princess Jasmine, the daughter of the sultan, is upset that she must marry due to Agrabah's laws rather than out of love, and runs away from home. While out on the street, she encounters Aladdin, who saves her from an angry merchant, and his pet monkey Abu.
As a bond develops between the two, Aladdin is captured by the guards and sent to prison, where he encounters Jafar, who has disguised himself as a beggar. Freeing them, Jafar leads Aladdin and Abu to the cave where they are granted entry but told not to touch anything except the lamp. Inside the cave, Aladdin finds the lamp and a magic carpet, but Abu causes the cave to collapse when he grabs a gemstone. Trapped in the cave, Aladdin rubs the lamp-which Abu had stolen back from Jafar-and frees the Genie who resides inside it. Genie grants Aladdin three wishes, but he tricks him into freeing them from the cave by not making a wish. When he learns of the Genie's desire to be free, Aladdin promises to save his last wish to free him, using his first wish to become a prince to court Jasmine.
Disguised as Ali Ababwa, Aladdin meets the Sultan, Jafar, and Jafar's pet parrot Iago, arriving with a large host, and angers Jasmine when she overhears him talking with her father and Jafar about her future marriage. To make it up to her, Aladdin takes her on a starlit magic carpet ride. When she infers his true identity, he lies that he pretends to be a peasant to escape the stresses of royal life. After he takes Jasmine home, Aladdin is captured by the guards-under Jafar's orders-and thrown into the bay to drown. Aladdin summons Genie, who saves him, but at the cost of his second wish. Upon returning to the castle, Aladdin exposes Jafar as a traitor; the sorcerer escapes, but not before discovering the street rat has the lamp.
Fearing his lie will be exposed, Aladdin reneges on his deal to free Genie, to his best friend's anger and dismay. Iago steals the lamp and Jafar becomes Genie's master; using his first wish to become Sultan, and his second to become a powerful sorcerer; he uses his magic powers to expose Aladdin as a fraud, and banishes him, Abu and the magic carpet to a frozen wasteland. The three return to the kingdom where Jafar has Jasmine captured, and Aladdin battles Jafar-who transforms into a giant king cobra-; our hero then taunts the sorcerer about being "second-best", goading him into wishing for even more power. Jafar then uses his third and final wish to become "an all-powerful genie", but learns too late about the "itty-bitty living space" that comes with his newfound "phenomenal cosmic powers". As a result, the evil sorceror-turned-genie is dragged into a black lamp, along with Iago, and thrown into the desert by Genie.
With Agrabah free, Aladdin decides to uphold his promise to Genie and free him, despite the latter urging him to wish to become a prince again, and marry Jasmine legally. Realizing Aladdin's nobility, the Sultan changes the kingdom's laws to allow him to marry Jasmine. Genie celebrates his newfound freedom and goes off to travel the world, and Aladdin and Jasmine embark on their new life together.
