Eric, a young boy, is excited about his birthday after reading a book and believes that a train will come for him, despite his sister Jill's disbelief. A few hours later, the train station's control tower wakes up and in the roundhouse, Tillie, a young little blue switcher engine, along with her best bird friend, Chip, wakes up four other trains: Georgia, a kind all-purpose engine, Farnsworth, a stuck-up, shiny, new passenger engine, Jebediah, a worn-out, rusty, old engine, and Pete, a gruff, burly, big, strong freight engine. After the tower assigns Farnsworth and Pete their jobs, Tillie tries to help with the milk train assigned to Jebediah, but the tower insists that she is too small for the job. Georgia is assigned to pull the birthday train. A clown named Rollo leads the toys into the train, including Jeepers, a monkey, Stretch, a basketball player, Missy, a ballerina, Handy Pandy, a panda, Perky, an elephant, and Grumpella, a stuffed bird.
During her journey, Georgia breaks down and is taken back to the roundhouse by Doc. Left behind, Rollo eventually takes Doc's advice of flagging down one of the other engines returning from their daily runs over the mountain. Farnsworth and Pete turn down their offers to pull the train. Meanwhile, Tillie asks the tower to rescue the stranded train, but he angrily insists that Tillie will never do the job. Jebediah turns down his offer to pull the train because of his age, and returns to the roundhouse. Chip and Tillie sneak past the sleeping tower and pulls the birthday train up a mountain. Despite being ridiculed by the animals along the way, Tillie manages to reach the summit after crossing a bridge that collapses, losing the last train car along the way.
However, an avalanche knocks Tillie out cold. Eric is woken up by a thunderstorm and is worried about Tillie and the birthday train. After Tillie regains consciousness, she pulls the train out of the snow using her cowcatcher as a snowplough and down the mountain before they reach the town, much to Eric and Jill's happiness. The film ends with Tillie, who although very tired from her long and adventurous journey over the mountain, is very proud and happy and tells her best friend Chip that she did what she could (though what the tower and the other engines will think is unknown).