Carl Fredricksen (Jeremy Leary) is a shy and quiet boy who idolizes renowned explorer Charles F. Muntz (Christopher Plummer). He learns, however, that Muntz has been accused of fabricating the skeleton of a giant bird he had discovered in Paradise Falls, South America. Muntz vows to return there to capture one alive. One day, Carl befriends an energetic tomboy named Ellie (Elizabeth Docter), who is also a Muntz fan. Detailing her ambitions in her personal scrapbook, she tells Carl her desire to move her "clubhouse" -- an abandoned house in the neighborhood -- to a cliff overlooking Paradise Falls, making him promise to help her.

Carl and Ellie eventually get married and grow old together in the restored abandoned house, working as a toy balloon vendor and a zookeeper, respectively. Unable to have children, they repeatedly try to save for a trip to Paradise Falls, but something always seems to come up that requires their savings. One day, Carl is finally able to buy tickets to South America. He comes back to their home to learn that Ellie has what will become a fatal illness.

As the years pass, the city grows around the now-elderly Carl's (Edward Asner) house. A developer buys all the surrounding land, but Carl refuses to sell. When a construction worker accidentally damages his mailbox, Carl strikes him on the head with his cane. The construction worker sues Carl in court, and Carl is forced to move into a retirement home. However, Carl comes up with a scheme to keep his promise to Ellie: he turns his house into a makeshift airship, using numerous helium balloons to lift it off its foundations. A young Wilderness Explorer named Russell (Jordan Nagai), who had pestered Carl in an attempt to earn his final merit badge for "assisting the elderly", becomes an accidental passenger.

After surviving a thunderstorm, the house lands near a large ravine facing Paradise Falls. Carl and Russell harness themselves to the still-buoyant house and begin to walk it around the ravine, hoping to reach the falls before the balloons deflate. Russell later befriends a tall, colorful flightless bird, who is trying to return to her chicks. Russell names the bird Kevin and makes Carl promise to help return her safely to her brood. The group then meets a dog named Dug (Bob Peterson), who wears a special collar that allows him to speak. However, along the journey, they are ambushed by a pack of similar dogs, led by Alpha (also Bob Peterson), and taken to Dug's master.

Dug's master, however, turns out to be an elderly Charles Muntz. Muntz explains that he has spent the years since his disgrace searching Paradise Falls for the giant bird. Muntz invites Carl and Russell aboard his dirigible for dinner. When Russell innocently reveals his friendship with Kevin, the obsessed Muntz becomes disturbingly hostile. Carl and Russell flee, chased by Muntz's army of dogs; Kevin is bitten on the leg in the escape. Muntz eventually catches up with them and ensnares Kevin. He then starts a fire beneath Carl's house, forcing Carl to choose between saving it or Kevin. Carl rushes to put out the fire, allowing Muntz to take the bird. Carl and Russell eventually reach the falls, but Russell is angry with Carl over his abandonment of Kevin.

Settling into his home, Carl is sadly poring over Ellie's childhood scrapbook when, to his surprise, he discovers photos of their married life on the formerly blank pages, and a final note from Ellie, thanking him for their adventure together and encouraging him to go on a new one. Reinvigorated, he goes to find Russell, only to see him using some balloons to go to Kevin's rescue. Carl refloats his house by dumping many of his possessions and gives chase.

Russell is captured by Muntz, but Carl frees both the boy and Kevin. Armed with a hunting rifle, Muntz pursues them around the airship, finally cornering Dug, Kevin, and Russell inside Carl's house. Carl then lures Kevin out through a window with a chocolate bar, with Dug and Russell clinging to her back, just as Muntz is about to break in. Muntz leaps after them, only to snag his foot on some balloon lines and fall to his death. Freed from its tether, the house descends below the clouds and out of sight.

Carl reunites Kevin with her chicks, then flies the dirigible back to the city. When Russell's father misses the ceremony promoting his son to Senior Explorer, Carl takes over and proudly presents Russell with his final badge: the grape soda cap badge that Ellie gave to Carl when they first met. Meanwhile, Carl's house is shown to have landed on the cliff beside Paradise Falls.