In the small town of Oakey Oaks, Chicken Little causes widespread panic and mayhem when he rings the alarm bell, claiming the sky is falling. He is humiliated in front of his father Buck Cluck and the entire town when, after telling everyone a piece of the sky “shaped like a stop sign” had hit him on the head, he is unable to find it. All the residents assume an acorn must have fallen on him and Chicken Little becomes a laughing stock.
One year later, Chicken Little is still being ridiculed for the incident and is bullied at school by Foxy Loxy and Goosey Loosey. His best friends Abby Mallard, Runt of the Litter, and Fish Out of Water advise him to talk about his feelings with his father, but Little is more concerned with restoring his reputation outright.
During dodge ball, following a bust-up with Foxy and a rough beating by Goosey (on Foxy’s orders), his father is called in and Little overhears the school principal Principal Fetchit stating that Buck had been the school baseball star in his youth. Determined to rekindle his relationship with his father, Chicken Little signs onto the baseball team. In the final inning of the big Oakey Oaks pennant game, with all the other players injured, he is called up to bat and manages to hit an inside-the-park home run. Despite some confusion, the umpire ultimately declares the game won; Chicken Little is hailed as a hero for winning the pennant and Foxy is humiliated.
Later that evening, Chicken Little prepares to go to a victory party being thrown for him by Abby, Runt, and Fish, but another “piece of the sky” identical to the one he had been hit by the previous year falls through his bedroom window. Not wanting to bring the matter up with him again, Little hides the sky piece from his father and examines it more closely, discovering it to be a bizarre panel-like device designed to blend in with its surroundings. Realizing that this is why he was unable to find it the first time, Chicken Little immediately calls his best friends over to help figure out what the device is.
While playing around with the panel, Fish presses a button on its underside and it carries him out of Chicken Little’s bedroom and into the sky, where it appears to fit into a gap. Disturbed by this, Little, Abby, and Runt immediately give chase and follow Fish to the ball field, where a series of similar panels appear in the sky; revealed to be part of an invisible UFO’s camouflage. The three sneak aboard the ship and retrieve Fish, but Runt locates a map of the solar system that seems to indicate Earth is being targeted for an alien invasion. Thinking that the UFO is being used to sneak aliens onto the planet undetected by disguising itself as the sky, the group immediately flees to warn the town, inadvertently releasing a small orange creature from the ship in the process, which follows them.