Mei realizes she cannot go through with her arranged marriage after falling in love with Yao. Ling, Yao, and Chien-Po accompany the three princesses to a nearby village to attend a festival. There, Su and Chien-Po bond over their love of food and Ting Ting finally succumbs to Ling's attempts to seduce her and surprises him that she too has a sense of humour. When Mulan arrives, she approves of the relationships. Shang however is furious and forbids Ling, Yao, and Chien-Po from interacting with the princesses. He and Mulan argue over how she places her feelings above everything else, including their mission. With their relationship already beginning to strain, thanks to Mushu's interference, Shang and Mulan return to camp realizing that they are just "too different".
The next day, as the party travels through a mountain pass in bandit country, Mulan and Shang are not speaking to each other. Guilt-ridden, Mushu confesses everything to Mulan, and despite being angry at Mushu, Mulan realizes that she and Shang are not so different after all and decides to reconcile with him. But before she can, they are attacked by bandits who kidnap Mei and retreat to a bridge. Mulan and Shang rescue Mei, but the bandits sever the ropes holding up the bridge, leaving the couple dangling over a chasm. Realizing that the rope will not support their combined weight, Shang lets go of Mulan's hand and allows himself to fall into the river far below.
The party mourns Shang's supposed death and Mushu now regrets everything he's done. Mulan goes on to Qui Gong alone, not wanting the princesses to go through their arranged marriages and believing Shang to be dead, she offers herself as a bride to one of the king's sons.
Shang however has survived his fall and reunites with the others. Together, they travelt to Qui Gong and prevent the marriage. Mushu impersonates the Golden Dragon of Unity and forces Lord Qin to perform Shang and Mulan's wedding. He also decrees that Mei, Ting Ting and Su are free to marry whoever they choose.
Back home, Mushu, finally happy with Mulan's newfound happiness, is prepared to return to his old job on gong duty, but Shang combines the family temples. Celebrating that he still gets to be Mulan's guardian, Mushu accidentally reveals himself to Mulan and Shang and is shocked to learn that Mulan told Shang all about him.