Following the events of the second movie, Banjo, Grace, and their children Crystal who loves music, Belle who loves to explore, Junior who loves to tell jokes, and Max who loves to be independent who loves living in the Amazon Rainforest with Blu, Jewel, Bia, Carla, Tiago, Eduardo, Mimi, Roberto, and the Blue Spix Macaw Tribe. Meanwhile back in Rio De Janeiro, Daisy, Fred, Linda, Tulio, Fernando, and Walter are at the sanctuary back in Rio. Daisy and Linda miss their companions Banjo and Blu hope to see them very soon. Together they are observing the sanctuary in the Amazon by looking at photograph images to insure that their habitat is being preserved but while looking at the photographs closely Tulio learns that a large area of the Amazon Rainforest regions has been some what abandoned and informs Linda, Fred, Daisy, Fred, Walter, and Fernando that the Spix Macaws could be under threat. Linda, Tulio, Daisy, Fred, Walter, and Fernando could protect the Spix Macaws at all costs.
Back in the Amazon Rainforest, Max is dating his new girlfriend Stephanie, Junior is spending time with his friends, Belle and Crystal is exploring new things, and Grace is happy with her mate Banjo. Banjo miss his domesticated life with Daisy and wants to visits her soon. Banjo told Grace about his wish to visit Rio. Grace agreed with Banjo to go back to Rio and get the kids ready to go on a journey. Banjo is thinking about adding a flock of birds for a journey to Rio, he decide to invite Blu, Jewel, Bia, Carla, Tiago, Eduardo, Mimi, Roberto, Peter, Susan, Jenny, Garth (his new best friend), Nico, Pedro, Rafael, Eva, Luiz, Felipe, and Perry. Banjo told his friends Red, Chuck, Bomb, Matilda, Terence, Jay, Jake, Jim, Stella, Cedric, Silver, Hal, Bubbles, Rico, Ricky, Blaze, Tony, and Lola about going to Rio and his friends agreed. Rico and Ricky wants to catch Samba in the city. Banjo told the blue macaws and their friends about adding birds to the flock about going to Rio De Janeiro Blu, Jewel, Bia, Carla, Tiago, Eduardo, Mimi, Roberto, Peter, Susan, Jenny, Garth, Nico, Pedro, Rafael, Eva, Luiz, Felipe, and Perry. Banjo told everyone about going to Rio. Blu, Jewel, Bia, Carla, Tiago, Eduardo, Mimi, Roberto, Peter, Susan, Felipe, Nico, Pedro, Rafael, Eva, Felipe, Perry, and Luiz wants to join Banjo's flock. Banjo is shocked that his father-in-law wants to come to the city for the first time. Banjo wants to talk to Peter why he decides to go to Rio with them and Peter respond saying Banjo you showed him not all humans are bad which shocked Banjo. Eduardo and Peter makes a deal with Jenny and Felipe to watch over their tribe until they return from Rio. The next morning, Banjo's friends, family, and the flock he added take a ride on the paddle boat. Banjo is thinking about losing his parents before he was smuggled to Pennsylvania, Grace is looking at her husband thinking about something, she asked Banjo what are you thinking about. Banjo is been thinking about his long lost parents and Grace asked do you know what happened to them. All Banjo remembered he was smuggled by humans when he was a chick. Grace and everyone else feel bad for Banjo. Rafael told Banjo everyone was sorry about what happened to him but you have Grace, the kids, and everyone which Banjo begins to smile.
Daisy is looking for books on her childhood memory of Banjo. She looks at the picture when he was a chick, he was adorable. Fred remind his wife that Banjo is happy in the Amazon with his tribe and he have responsibilities. The flock and two dogs finally made it to Rio, Grace wants to show her parents how her and Banjo met and fall in love and Jewel wants to show her father Eduardo just like Grace is doing. Nico, Pedro, Rafael, Eva, Red, Chuck, Bomb, Matilda, Terence, Jay, Jake, Jim, Stella, Cedric, Silver, Hal, Bubbles, Rico, Ricky, Blaze, Tony, and Lola and Banjo, Blu, and the blue macaws go their separate ways. Nico, Pedro, Rico, and Ricky wants to prepare the festival party in Rio. Jewel, Bia, Carla, Tiago, Roberto, Mimi, Banjo, Grace, Belle, Crystal, Junior, Max, Peter, and Susan follow Banjo and Blu's to their human friends. Linda, Tulio, Fernando, Daisy, Fred, and Walter greeted the birds. It was a long flight to Rio, they took a rest. At the Samba Club party, it was hosted by Nico, Pedro, Rico, and Ricky. Eduardo, Roberto, Mimi, Peter, Susan, Felipe, and Perry look at the club and they loved it. The club is where Banjo, Grace, Blu, and Jewel dance when the four fall in love at. The birds celebrate together by dancing in the club and even pick out some of the exotic fruits from the market place. Just as the song finishes they hear loud squarks and screams coming from outside and find to their surprise that a massive army of orange and yellow macaws, Nigel, and Hector since the cockatoos have grudges against Banjo and Blu, they were lead by an evil named Terilo. One of the yellow macaws threatens Tiny and attack Rio. The birds fight Terilo and his army. Terilo attack Blu and Jewel and Banjo saved them. Nico, Pedro, Rico, and Ricky cancelled the party, clean the Samba Club while the others escape Rio. The blue macaws go back to the Blue Macaw sanctuary to tell them they are going back to the Amazon next day because the army of bad birds ruin the Samba Club party.
The next morning, Blu, Jewel, Banjo, Grace, their friends and family leave Rio next day to go back to the Amazon Rainforest. Back at the Blue Macaw tribe, Roberto, Garth, Jenny, and Mimi is looking over the tribe until they see Blu, Jewel, Banjo, Grace, their friends and family returned after a few days of traveling. Roberto ask what happened and Banjo respond that Terilo and his army of birds ruined the party which made us return back to the Amazon. Max is reunite with his girlfriend Stephanie. Roberto see humans Linda, Tulio, Fernando, Daisy, Fred, and Walter is at the Amazon Rainforest. Roberto is starting to trust humans after defeating the loggers in the second film. Linda came to the Amazon Rainforest to warn the blue macaws there is a threat in the Amazon Rainforest which means they need to stay alert. Peter wants to know about his son-in-law parents. Peter asked Banjo who is Terilo, Banjo respond that Terilo was the one that separated from his family. Banjo don't know about his parents and siblings, he needs to find answers about his past. Roberto sees a new female macaw named Elizabeth who is Banjo's long lost sister. Elizabeth recognizes Banjo and she hugged him as her long lost brother. Banjo asked his sister Elizabeth how you found him. Elizabeth answered him I saw him and his family leaving, and I decided to come to the Amazon Rainforest. Banjo talks about his early life and how he became a companion, Jasmine is intrigued by this and asks how he ended up in the Brazil and when Banjo finishes his entire story about Pennsylvania, his adventure with Grace and the Amazon, Elizabeth is amazed by everything he has achieved in his life. She asks if she will ever be accepted here to which Banjo says she already has. She also asks her older brother if she will ever find someone like he has Grace. Linda, Tulio, Fernando, Daisy, Fred, and Walter arrived in the Amazon and they to,d the blue macaws there is a threat coming to the Amazon Rainforest and they need to evacuate. Tulio said him and his family will protect the Amazon Rainforest and the animals as well. Crystal and Carla's worried about their friends Nico, Pedro, Rico, and Ricky because they seem worried that their friends are kidnapped by Terilo and his army. Blu said they promised to return to the Amazon after they clean the Samba Club. Rafael and Eva arrived in the Amazon they told them the bad news that Rico, Ricky, Nico, and Pedro are kidnapped by Terilo and his army of birds. Blu, Jewel, Blu, Grace, the kids, and everyone gasped in shock.
Nico, Pedro, Rico, and Ricky are in the the Eastern Of The Amazon. Terilo see the four birds waking up. Pedro asked why they kidnapped them. Terilo responded to keep them company and he told them the story on how he was a ninth family of the peregrine falcons and he was an outcast his entire life because his brothers mistreat and bully him that he become evil in the first place. Nico hopes that Blu and the others will come back and rescue them. Elizabeth heard the news and decide to come with them to rescue Nico, Pedro, Rico, and Ricky. The flock heads rescue Nico, Pedro, Rico, and Ricky on the Amazon Rainforest. The four birds thank their friends and they escape before Terilo and the army of birds come back. Garth have feelings for Elizabeth, he realized she is his new girlfriend. Garth sings a song to show his love for her and Elizabeth enjoyed the song. Terilo and his army knows the birds escape and orders his army to find them.
Eduardo is glad to see Blu, Jewel, Banjo, and Grace's friends are alright until Terilo and his army of birds came. Eduardo told the Spix Macaw Tribe, Scarlet Macaw Tribe, and Military Macaw about saving the Amazon Rainforest from the evil tyrant Terilo. The three tribes agreed to this mission on saving the Amazon Rainforest. Banjo asked Terilo why is he doing this. Terilo plans was to conquer Brazil but his plans are ruined thanks to Banjo's parents who ruined his plans. However, Banjo confronts Terilo, inadvertently spoiling the plan and allowing the three tribes to be captured. Terilo lies and says Banjo's parents hated him, and shoots him. Terilo orders his army to kidnap Banjo's family and get all the other birds from the Amazon Rainforest. Badly wounded but alive, Banjo floats downriver and found out about his past. His family was wiped out by Terilo. Banjo lost his family because of Terilo. Terilo and his army set the Amazon Rainforest on fire which caused everyone to scream.
Banjo return to the Amazon Rainforest to save the others and the animals. Banjo, Grace, Belle, Crystal, Junior, Max, Eduardo, Roberto, Mimi, Peter, Susan, Nico, Pedro, Rafael, Eva, The Angry Birds, The Spix Macaw Tribe, Felipe, Scarlet Macaw Tribe, and Military Macaw Tribe fight Terilo's army. Eduardo and Felipe glared at the orange macaws and they fight them with bravery. Terilo had enough of this and decide to hurt everyone, everyone is injured all except Banjo. Banjo fight Terilo all by himself and succeed. Banjo convince Terilo to change his ways and let's go of the past but he refuse but Terilo tried to attack Banjo more than he falls to his death. Everyone cheered for Banjo for saving the Amazon and he is praised as a hero. Linda, Tulio, Fernando, Daisy, Fred, and Walter congratulates Banjo for saving the Amazon from Terilo. Eduardo announced the Amazon Rainforest is destroyed and have to wait a few months to recover. In Rio De Janeiro, Nico, Pedro, Rico, and Ricky celebrates a Brazilia festival in Rio, throws a party for the jungle animals, and Banjo, Grace, Blu, Jewel, friends and family celebrate together. Banjo and Grace shared a passionate kiss and celebrate together with their family and friends during the Brazilia festival in Rio and dance the night away in harmony. Daisy, Fred, Walter, Linda, Tulio and Fernando are seen living out their happy lives in Rio. Meanwhile Blu, Jewel, Bia, Carla, Tiago, Eduardo, Roberto, Mimi, Banjo, Grace, Belle, Crystal, Junior, Max, Stephanie, other Birds, the Blue Macaw Clan, Scarlet Macaw Clan, and Military Macaw Clan continue to celebrate together in the bustling city of Rio as a united family. After the main credits, we see a female blue macaw sighed in relief and saying her son and daughter are still alive somewhere and orders the tribe to go out and find them(Foreshadowing the events of The Angry Birds Banjo Rio Movie 4)and they set off to find her children. In the post-credit scene Terilo survived his death and plans to get revenge on Banjo. Hector intercepts him and decides to join him. They both have issues with the same blue macaw.