This is the story of Pascal (Pascal Lamorisse), who, on his way to school one morning, discovers a large helium-filled red balloon.

As Pascal plays with his new found toy, he realizes the balloon has a mind and will of its own, and it begins to follow Pascal wherever he goes, at times floating outside his bedroom window as Pascal's mother won't allow it in the house.

The little red balloon follows Pascal through the streets of Paris, and the pair draw inquisitive looks from adults and the envy of other children as they wander the streets. At one point the balloon enters Pascal's schoolroom which upsets his teacher.

In their wanderings around the neighborhood, Pascal and the balloon encounter a gang of bullies, and they destroy his new friend.

The other balloons in Paris come to Pascal's aid and take him on a cluster balloon ride.