Wayne Szalinski is an eccentric inventor with a world-changing invention: a ray that can shrink things down in size. It seems nobody else sees the merit of such a machine, provided it exists. Wayne's only support it seems, is his son Nick, a chip off the old block with just as good an eye for inventing. Even Wayne cannot find the support of his wife Diane or his easily worried daughter Amy. The ongoing antics of the Szalinski family often attract the attention of the next-door neighbors, the Thompson Family and their sons Russ and Ron.

One day, as things would have it, Ron accidentally activates Wayne's shrinking machine and it turns out that it works perfectly shrinking them all and leaving an angered and humiliated Wayne to throw them out with the garbage! The kids wind up on the front lawn and are tasked with the simple process of walking back home to find Wayne and return to normal size. Little do they know, the front yard is quite a different place when you are the size of a bug, and the few miles long journey to the front door is full of dangers including normal sized bees and torrents of water caused by lawn sprinklers. The Szalinski parents are also left to realize the mistake they made and have to keep the lawn safe from threats like lawn mowers while they try and find the kids themselves, not letting the neighbor parents get too worried.