Set in between the third film (Late 1880s) and second film (1892), Fievel, his friend, Tony and his sister, Tanya all get jobs at the local newspaper, where the audience is introduced to Nellie, who wants to be an important reporter, but only gets small assignments, as if she were a secretary to Reed, the newspaper’s editor.
Throughout the film, Tanya tries to win Reed’s heart, while Tony tries to get noticed by Reed and promoted to a reporter.
Like in the previous movies, where a mouse installation is directly below its human installation counterpart, the newspaper offices the mice work in is directly underneath the newspaper offices the humans work in.
Nellie gets a chance when she is assigned to report mice who disappear overnight into holes that open up on their floor all over New York. Reed makes up a, as Nellie calls it, “so-called monster” that lives under Manhattan and takes mice away during the night to add more excitement to the otherwise unimportant story, intending to sell more papers.
The night monster creates fears among the readers, as could be expected. Fievel begins having nightmares that cause him to lose sleep because of his fear of the monster; the film opens up with Fievel having a dream about being chased by what he thinks the monster looks like.
When, through Tanya, he is assigned the job of following Nellie and drawing up interperatations of what the monster looks like based on witness testimony, this makes his insomnia all the worse.
The heroes finally decide to investigate her by means of the “dog council” that meets at Central Park. They also search down one of the holes, which leads directly to a group of cats hiding in the sewers. Also, all the mice that had disappeared are being held in wood cages there, to be sold off to other cats and eaten.
The night monster itself, a mechanic device with ghastly flashing pictures and a circular saw, is revealed in full when it attacks the mice newspaper office and printing press to prevent them from printing the truth, which they had just discovered.
A great chase scene takes place throughout both the mouse and the human newspaper offices. Reed reveals that he was in love with Nellie all along, much to Tanya’s intense dismay.
When all the cats seem to be under control, the “dog council” appears just as they’re regaining consciousness and chase them all away, taking Madame Mousey with them.
The last scene takes place at the beach, where the audience is told that the “dog council” had chosen for the French poodle (who was the mastermind behind the night monster all along) a punishment worse than prison: returning her to her owner.
Mrs. Mousekewitz, Fievel’s mother, surmises saying that now that the mystery has been cleared up, Fievel may finally go to sleep, only to turn around and find him already asleep on the beach towel.