Mario and Luigi are two Italian American plumbers living in Brooklyn, New York, who are currently being driven out of business by the mafia-like Scapelli Construction Company, led by Anthony Scapelli. Later, Luigi falls in love with an orphaned NYU student, Daisy, who is digging under the Brooklyn Bridge for dinosaur bones. After a date, Daisy takes Luigi back to the bridge only to witness one of Scapelli's men sabotaging it by leaving the water pipes open. Since Luigi doesn't have any tools, he cannot fix the flooding. They rush back to his apartment where they inform Mario about the incident. The trio returns to the flooding where the Mario Bros. manage to fix it but are knocked unconscious by Iggy and Spike, who proceed to capture Daisy.
Moments later, Mario and Luigi awaken and head deeper into the caves following Daisy's screams and discover an interdimensional portal allowing the Mario Bros. to follow Daisy. They find themselves in a strange dystopian parallel world where a humanoid race evolved from dinosaurs rather than the mammalian ancestry of true humans in a Manhattan-like city called Dinohattan. Sixty-five million years ago, a meteorite crashed into the Earth, causing the universe to split into two parallel dimensions. All the surviving dinosaurs of the time crossed over into this new realm. It turns out that Iggy and Spike are henchmen (and cousins) of the other world's germophobic and obsessive dictator, King Koopa, who descended from the most revered dinosaur, the Tyrannosaurus Rex. The Mario Bros. realize they didn't bring Daisy's rock, a meteorite fragment which Koopa is trying to get in order to merge his world with the real world. It is then revealed that Daisy is the long-lost Princess of the other dimension. When Koopa overthrew Daisy's father (and de-evolved him into fungus), her mother took her to Brooklyn using the inter-dimensional portal. The portal was then destroyed, killing Daisy's mother in the process, but Scapelli's men accidentally reopened the portal when they blasted the cave. Upon hearing this, Koopa sends Spike and Iggy to find both Daisy and the rock to merge the dimensions and make him dictator of both worlds. However, after Koopa subjects them to one of his experiments to make them more intelligent, Spike and Iggy realize Koopa's evil intentions and side with the Mario Bros. Koopa believes only Daisy can merge the worlds, but the Mario Bros. are also from a different place and time. Eventually, the Mario Bros. rescue Daisy with the help of Toad, a good-natured guitarist who was punished by Koopa for performing music that protests his reign (for which he is de-evolved into a Goomba).
Eventually, the two worlds merge and Koopa turns Scapelli into a chimpanzee before going after Mario, but Luigi and Daisy bring back the rock and the worlds separate again. In Dinohattan, Mario confronts Koopa and eventually defeats him when he and Luigi fire their devolution guns at Koopa and blast him with a Bob-omb, throwing him into a chain suspended vat. Koopa, now turned into a ferocious, semi-humanoid Tyrannosaurus, jumps out of the vat, which is not far away from the Mario Bros., to deliver his final blow, but the Mario Bros. manage to destroy him once and for all by turning him further into an actual T-Rex, which is too intense for him to live through and instead turns him into primordial slime. Following Koopa's defeat, Daisy's father turns back to normal and reclaims control over the kingdom. The citizens celebrate and immediately destroy anything under Koopa's influence. Luigi admits his love for Daisy and wants her to come to Brooklyn with him, but Daisy can't come until the damage caused by Koopa is repaired and thus, she wants to spend more time with her father. Heartbroken, Luigi kisses Daisy goodbye as he and Mario return home to Brooklyn, with Daisy watching them leave. Three weeks later, the Mario Bros. are getting ready for dinner when their story comes on the news and the anchorman says they should be called the "Super Mario Bros." The movie ends when the Mario Bros. answer a knock at the door; it is Daisy, carrying a flamethrower, who asks for their help and says, "You're never gonna believe this!"
In a post-credits scene, two Japanese business executives talk about making a video game based on Iggy and Spike, who decide on the title: "The Super Koopa Cousins"; satirical to the Super Mario Bros. video game franchise.
