The film begins with Bert and Ernie introducing the film. As the story opens, Elmo welcomes the viewer, finds his fuzzy cotton blue blanket, and plays with it in his bedroom. After spilling juice on his Blanket, he takes it to the laundromat and has it washed and dried. Elmo then makes music with the laundry equipment, but Big Bird, the Count, Rosita, Baby Bear, and Prairie Dawn hear it unexpectedly. When he is about to take his blanket home, Elmo encounters his friend Zoe, who is feeling depressed because her father, due to having to work, cannot take her to the zoo, so Elmo decides to cheer up Zoe up by imitating some zoo animals. When Zoe sees Elmo's blanket, Elmo denies sharing with her, resulting in a tug of war that rips Elmo's blanket. Upset at this, Elmo declares that Zoe is no longer his friend.
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