The seven-year-old "man-cub" Mowgli, raised by wolves in the Indian jungle, is being tutored in the Law of the Jungle by Baloo the bear, but runs off in a temper when Baloo cuffs him for not paying attention. Bagheera the panther, who disapproves of Baloo's use of corporal punishment, persuades Mowgli to return and recite his lessons. These include the "Master Words" for various species that identify the speaker as a friend .
Bagheera is impressed with Mowgli's progress, but they are both horrified when the man-cub then reveals that he has been seeing the Bandar-log (Monkey-People) who have promised to make him their leader. Baloo and Bagheera insist that the Bandar-log are a boastful and ignorant race who have no leader and no laws, which is why they are shunned by the rest of the jungle.
Mowgli is suitably chastened, but soon afterward he is abducted by the Bandar-log who take him on a terrifying but exhilarating rush through the treetops. Seeing Chil the Kite flying above, Mowgli gives the kites' Master Word and tells Chil to find Baloo and Bagheera.
The bear and the panther are attempting to follow at ground level but cannot keep up. Realising that the monkeys' only fear is Kaa the python the two set off to find him. Bagheera cunningly goads the python into helping them by repeating (or inventing) some of the Bandar-log's insults against him.
In the Cold Lairs Mowgli soon realises that Bagheera was right. The monkeys can never keep their mind on any one thing and only captured him as an amusing novelty. They soon become bored with him but refuse to let him go. When Kaa and Bagheera arrive the monkeys throw Mowgli into an abandoned summer house that has been taken over by cobras. Mowgli hastily uses the snakes' Master Word to prevent them from striking.
When the bear and panther arrive, a furious battle ensues. Baloo and Bagheera are by far the more powerful fighters, but they are vastly outnumbered. Kaa is delayed by a large section of city walls but gets through, breaks down the wall of the summer house and frees Mowgli, who thanks him courteously. Then he scatters the crowd of monkeys fighting Baloo and Bagheera and performs his "hunger dance", hypnotising the Bandar-log so they cannot run away. Baloo and Bagheera are also hypnotised, but Mowgli, being human, is immune and snaps them out of their trances.
Baloo is all for letting the matter rest, but Bagheera is insistent that Mowgli must be punished for all the trouble he has caused. Ironically it is now Bagheera who advocates corporal punishment and Baloo who opposes it. But after half a dozen "love-taps" from Bagheera the score is settled and the three of them go home.