It stars Muppet performers Caroll Spinney, Jim Henson and Frank Oz alongside Sandra Bernhard, John Candy, Chevy Chase, Joe Flaherty, Waylon Jennings, and Dave Thomas with Sesame Street regulars Linda Bove, Emilio Delgado, Loretta Long, Sonia Manzano, Bob McGrath, Roscoe Orman, Alaina Reed, and Kermit Love in supporting roles and the voices of Laraine Newman, Brian Hohlfeld, Cathy Silvers, Eddie Deezen, and Sally Kellerman.

A strict social worker, Miss Finch, is sent to Sesame Street to find and bring Big Bird to a worthy family of dodos in Oceanview, Illinois.

His friends on Sesame Street also see the news and band together to locate him before Miss Finch does, and take several vehicles on their quest after Bob instructs them to head to Toadstool, Indiana to meet up with him.

While on the way home, Big Bird hitches a ride with a trucker who encourages him to persevere and later meets two kids named Ruthie and Floyd at a farm, who allow him to sleep in their barn overnight.

After escaping, Big Bird meets the Sleazes at their carnival and asks if they have a place to hide, resulting in them putting him in their cage and deciding to paint him blue and tout him as "The Bluebird of Happiness", though he sings sadly about wishing to be back home.

Realizing Maria is right, and acknowledging that they traveled all that way to find Big Bird, a sympathetic Miss Finch officially declares Sesame Street to be his home and happily leaves with her job complete.

Additional Board of Bird members performed by Bob Stutt, Nikki Tilroe, Lee Armstrong, Rob Mills, and John Pattison.

Additional Muppets performed by Kevin Clash, Frank Meschkuleit, Terry Angus, Matthew Pidgeon, Stephen Brathwaite, Tom Vandenberg, Francine Anderson, Ron Wagner, Martine Carrier, Karen Valleau, Michelle Frey, Gus Harsfai, Patricia Lewis, Charlotte Levinson, Carolanne McLean, Peter McCowatt, Brian Moffatt, Myra Fried, Jani Lauzon and Sandra Shamas.

According to Noel MacNeal, after completing the footage of Big Bird on the farm with Ruthie and Floyd, the filmmakers discovered that the film was badly scratched and unusable.

The actors, crew, and performers promptly had to return to the same location months later in winter, whereupon many of the green leaves in the film are spray-painted and after each take, the kids would run to put their coats on.

Before Ken Kwapis was chosen to direct, John Landis (who had previously performed Grover in the "Rainbow Connection" finale in The Muppet Movie) was asked by Warner Bros.

"[3] Walter Goodman observed in The New York Times that "by and large, the script by Tony Geiss and Judy Freudberg and the direction by Ken Kwapis don't strain for yuks; what they seek, and more often than not attain, is a tone of kindly kidding.