The story revolves around Argentine president, Hipolito Yrigoyen, nicknamed by his detractors "Peludo" (Armadillo), sailing as a pirate on his ship Peludópolis (Peludo city, which represented Argentina) to the island of Quesolandia, while constantly being harassed by hungry sharks (the dissident Radicals).

Peludópolis had been stolen by Yrigoyen from her former owner, the "Pelado" ("The Bald", nickname of the dissident Radical leader and ex-president Marcelo T. de Alvear), and is eventually recovered by Argentine military forces.

During this time, Cristiani added an everyman character named Juan Pueblo to act as the moral center of the film.

The single most notable feature of Peludópolis was the fact that it was the first animated film to be released with sound.

Cristiani added this feature partway through production, before the plot had been rearranged, using the Vitaphone sound-on-disc system to record the sound that was to play alongside the film.