Shrek, a solitary ogre, finds a surprise when fairy tale creatures are sent to live in his swamp by the evil Lord Farquaad. Shrek befriends a talking Donkey, and the two set off to meet with Lord Farquaad. Lord Farquaad needs Princess Fiona to marry him so that he will become king. So when Shrek and Donkey visit him, they are forced to rescue her from an enormous fire-breathing dragon. The Dragon turns out to be a girl and she falls in love with Donkey. However Donkey escapes and Dragon chases them.
Once Shrek and Donkey rescue Fiona they take her back to Lord Farquaad. However, along the way, Shrek falls in love with Fiona. Fiona reveals she is cursed and turns into an ogress at night. The only way the curse can be broken is by true love's first kiss. Fiona and Farquaad have a marriage ceremony; however they are interrupted by Shrek who tells Fiona he loves her. Shrek and Fiona kiss and Fiona turns into an ogress permanently. Shrek gets his swamp back, and the two marry there. After a karaoke party the two set off on their honeymoon.
The film is set in a fairytale world, with appearances from commonly known fairytale characters.