On Monster Island, a strange land inhabited by miniature, super-deformed versions of classic kaiju, the optimistic young creature Chibi Godzilla dreams of one day growing large enough to earn a hug from his colossal father, the legendary King of the Monsters. His daily routine of harmless mischief is disrupted when an amnesiac robot, Chibi Mechagodzilla, washes up on the shore. After being forcefully awakened by Chibi Godzilla's playful heat ray, the logical and straight-laced mecha decides to befriend the enthusiastic monster, forming an unlikely duo that explores the island's many quirks.

The series primarily follows this pair as they navigate the eccentricities of Monster Island's residents, often through rapid-fire manzai-style comedy routines where Chibi Mechagodzilla serves as the frustrated straight man to the absurd logic of his monster friends. Their social circle includes the three-headed Chibi Ghidorah, whose heads constantly bicker and contradict each other; the shy divine moth Chibi Mothra, who communicates through twin fairy priestesses known as the Shobijin; and the incredibly vain pteranodon Chibi Rodan, whose ego is so fragile that he faints at the slightest criticism. The island also features a bar-owning mutant plant named Chibi Biollante, a human-slandering smog monster named Chibi Hedorah, and Chibi Anguirus, whose voice has broken into unintelligible roars.

As the series progresses into its second season, the narrative expands beyond simple introductions. Chibi Godzilla is reunited with his energetic younger sister, Chibi Minilla, adding a new family dynamic. The backstory of Chibi Mechagodzilla is explored when the cyborg monster Chibi Gigan arrives, revealing that the robot was originally sent to destroy Monster Island, a mission he can no longer remember or bring himself to complete. Further arcs introduce Chibi Gabara working multiple part-time jobs, Chibi Titano as an ineffectual hooligan, and a significant revelation that the quiet Chibi Mothra is secretly an avid otaku with intense hobbies. Throughout these adventures, Chibi Godzilla continues his quest for recognition, culminating in attempts to prank his distant father, such as building a replica of the Oxygen Destroyer, which generally end in chaotic and educational failures for the tiny monsters.