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After being used in "guess the weight" contest at a county fair, orphaned piglet Babe is brought home to the farm of the contest winner, Arthur Hoggett. There he is taken in by Border Collie Fly, her irascible mate Rex and their puppies and befriends a duck named Ferdinand, who wakes people by crowing like a rooster every morning so he will be considered useful and be spared from being eaten.

Dismayed when the Hoggetts buy an alarm clock, Ferdinand persuades Babe to help him destroy it. In doing so they wake Duchess, the Hoggetts' cat, and wreck the house in the ensuing chaos. Rex sternly instructs Babe to stay away from Ferdinand and the house. Seeing Fly saddened when her puppies are put up for sale, Babe lets her adopt him. With the Hoggett's relatives visiting for Christmas, Hoggett decides against choosing Babe for Christmas dinner, remarking a pretext to his wife Esme that Babe may bring a prize for ham at the next county fair. Ferdinand's friend Rosanna is served instead, prompting Ferdinand to escape the farm. Babe investigates the fields, where he witnesses two men stealing Hoggett's sheep and quickly alerts Fly and the farmer, preventing the thieves from taking the whole flock.

Impressed after seeing Babe sort hens, separating the brown from the white ones, Hoggett takes him to try and herd the sheep. Encouraged by an elder ewe named Maa, the sheep cooperate, but Rex perceives Babe's actions as an insult to sheepdogs. After Fly stands up for Babe, Rex attacks and injures her and bites Hoggett's hand when he tries to intervene; Rex is subsequently chained to the dog house and sedated, leaving the sheep herding job to Babe. One morning, Babe scares off a trio of feral dogs attacking the sheep, but Maa is mortally injured, and dies as a result. Hoggett, thinking Babe killed Maa, prepares to shoot him but Fly finds out the truth from the sheep and distracts Hoggett for long enough until Esme informs him about the dogs' attacks on neighboring farms.

When Esme leaves on a trip, Hoggett signs Babe up for a local sheepherding competition. As it is raining the night before, Hoggett lets him and Fly into the house, where he is scratched by Duchess, who in turn is temporarily confined outside as punishment. When she is let back in later, she gets revenge on Babe by revealing that humans consume pigs. After learning from Fly that this is true, Babe runs away and Rex finds him the next morning in a cemetery. Hoggett brings a horrified and demoralized Babe home, where he refuses to eat. Hoggett feeds him from a baby bottle, sings "If I Had Words" and dances a jig for him, restoring Babe's faith in Hoggett's affection.

At the competition, Babe meets the sheep that he will be herding, but they ignore his attempts to speak to them. As Hoggett is criticized by the bemused judges and ridiculed by the public for using a pig instead of a dog, Rex runs back to the farm to ask the sheep what to do. After promising he will treat them better from now on, the sheep disclose to him a secret password. He returns in time to convey the password to Babe, and the sheep now follow his instructions flawlessly. Amid the crowd's acclamation, Babe is unanimously given the highest score. While he sits down next to the farmer, Hoggett praises him with the standard command to sheep dogs that their job is done, "That'll do, Pig. That'll do."

( Unreleased) 1991-2000