Millions of years before time, a giant three-headed dragon called Desghidorah arrives on Earth and battles a species of enormous and highly advanced moths. The moths are the protectors of the "Elias", a race of tiny, humanoid beings who inhabit the planet. After the ensuing battle, Desghidorah is defeated and sealed under the Earth - at the cost of almost all life on Earth.

Only three Elias, Moll, Lora and Belvera, and one last moth, Mothra, remain. To preserve her species, Mothra creates an egg in 1996; however, she becomes physically exhausted from the ordeal. Shortly thereafter, a logging company uncovers Desghidorah's subterranean prison and breaks the seal. Yuichi Goto, one of the workers, takes the seal home and gives it to his young daughter Wakaba as a souvenir. Seizing the advantage, Belvera controls Wakaba and uses her to torment her brother Taiki, reminding Belvera of her hatred towards her sisters.

Moll and Lora, riding a smaller Mothra named Fairy, then battle Belvera for control of the artifact. Belvera prevails and manages to release Desghidorah from its rocky tomb to exact her warped plans for destruction of the human race. Mothra is summoned to halt the detestable dragon, which is absorbing the life out of the environment. She fights a long and difficult battle to repel her ancient adversary, and in response to her declining strength, her young son, named Mothra Leo, hatches prematurely to assist his mother. Though his energized silk seems to turn the tide of battle in the favor of the protectors, Desghidorah sinks the teeth of two of his heads deep into Leo and Mothra becomes desperate. She quickly airlifts her son to safety, and to keep Desghidorah at bay, lures the beast to a dam. With Desghidorah distracted by a wall of raging water, Mothra carries her son to safety. Mothra's wounds, age, and weariness are ultimately too much. Her strength failes, and after lowering her child carefully into the sea, she falls exhausted onto the waves and sinks to her death. The distraught larva attempts to save his beloved mother, but to no avail.

Angered, the young moth creates a cocoon and began to change into his adult form. Desghidorah goes on a rampage, destroying everything in its path as the humans watch helplessly. Moll and Lora, who befriend Taiki and Wakaba, encourage them to have hope and remind them that Mothra would be reborn to save the Earth. Leo emerges into his adult form as a swarm of multi-colored butterflies. As the butterflies coalesce into one massive insect, Leo takes to the air and heads back towards Desghidorah, righteous fury burning in his wake. Arriving in a hail of energy beams, Leo relentlessly blasts his the three-headed monster, throwing wave upon wave of searing beams and energy blasts at Desghidorah, who can only feebly attempt to defend himself against this, the most powerful Mothra of all time. Drawing upon an ancient legacy, Leo relentlessly assaults Desghidorah, eventually renewing the seal that bound the world destroyer beneath the soil of the earth; but his work is not done with the end of the fight.

Drawing upon the power of life that filled his very being, Leo restores the balance to a blasted region that was deforested during the assault of Desghidorah. His work done for the time being, Leo travels to his ancestral home and planet Earth is once again safe from Desghidorah. Moll and Lora thank the children for helping them on their journey and return home to Infant Island with their pet Fairy, as Belvera, still vengeful, escapes into a hole in a tree.