Mr. Peabody is a talking dog who is the smartest being in the world. As a puppy, he was rejected by every potential owner, leading him to devote his life to science, athletics and technological discoveries. One day, Peabody finds an orphaned infant and legally adopts him under the name of Sherman. He tutors Sherman through a series of adventures throughout history with the use of the WABAC, a time machine and his greatest invention. After narrowly escaping the French Revolution, Sherman starts his first day of school and falls into conflict with classmate Penny Peterson, who he innocently showed up in history class with his first-hand knowledge of George Washington. Penny bullies and humiliates Sherman, insulting him by calling him a "dog" for being raised by one, which provokes Sherman into biting her. Peabody visits Principal Purdy about the matter, but is confronted by Ms. Grunion, a bigoted child and family services agent who threatens to reclaim Sherman if an upcoming home inspection is deemed unfit for him.

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