Raggedy Ann is the beloved doll of Marcella, along with her brother Raggedy Andy and a whole nursery full of colorful toys. Whenever Marcella leaves the room, the dolls come to life. On Marcella's seventh birthday, a new doll named Babette, arrives from Paris, France to New Hampshire. Babette is a spoiled girl who is unaware she is a doll, but the friendly Raggedy Ann does everything she can to make Babette feel at home. Soon, however, the Captain Contagious, who lives in Marcella's snow globe, becomes smitten with Babette and kidnaps her. Raggedy Ann and Andy set off to try to rescue her before Marcella discovers Babette is gone. Out in the world outside the nursery, the two meet the Camel with the Wrinkled Knees, a blue toy camel who has been cast off by past owners and is now heartbroken and lonely. Raggedy Ann assures him a home with Marcella, and he joins their rescue party.