- Directors: Dave Borthwick, Jean Duval, Frank Passingham
- Producers: Claude Gorsky, Laurent Rodon, Pascal Rodon
- Writers: Paul Bassett, Raolf Sanoussi, Stephane Sanoussi, Butch Hartman
- Genres: Animation, Adventure, Comedy, Family
- Actors: UK, Kylie Minogue, Joanna Lumley, Robbie Williams, Jim Broadbent, Bill Nighy, Ian McKellen, Tom Baker, Ray Winstone, Lee Evans, US, Kylie Minogue, Whoopi Goldberg, Daniel Tay, William H Macy, Jimmy Fallon, Ian McKellen, Jon Stewart, Bill Hader, Chevy Chase, Kevin Smith
The film begins with a shaggy, candy-loving dog named Dougal trying to get sweets from a candy cart. He goes so far as to place a tack in the road to pop its tire, thinking to be rewarded for watching the cart. After convincing the driver to leave, Dougal is trying to decide which candy he will request when he accidentally starts the cart up again and causes it to collide with the titular magic roundabout at the center of the village. A blue jack-in-the-box-like creature emerges from the top and flies away, snatching a decorative Foot Guard figurine from the roundabout before leaving. The roundabout freezes over, trapping repairman Mr. Rusty, Dougal’s young owner Florence, and two other children named Basil and Coral within an icy cell.
The villagers are horrified by this development, therefore call upon the resident wizard, Zebedee, also a jack-in-the-box-like creature, for help. He explains that the roundabout acted as a mystical prison for the evil ice wizard Zeebad. With it broken Zeebad is free to work his magic on the world again (it is implied he started the first ice age). The only way to return Zeebad to his prison is to place three magic diamonds in the roundabout, or watch the world slowly freeze over again. Zebedee sends Dougal, Brian the cynical snail, Ermintrude the opera-singing cow, Dylan the hippie rabbit, and the magic Train to accomplish this mission. Zeebad animates the Foot Guard figurine, Sergeant Sam, and enlists him to find the enchanted diamonds first, for with them Zeebad can freeze the sun itself. Meanwhile, Zebedee’s fellowship makes camp in the icy mountains near Zeebad’s old lair. Dougal wanders off during the night and is captured by Zeebad. Ermintrude breaks him out of his prison; after a short chase, Zebedee shows up to battle his evil counterpart. Zeebad gains the upper hand and overpowers Zebedee, freezing him and collapsing the cliff on which he stands.
Mourning their dispatcher as dead, Dougal and his friends embark to recover the diamonds. This task takes them to a lava-bordered volcano, an ancient temple filled with booby-traps and evil skeleton guards (at which point Dylan reveals an exceptional knowledge of several types of martial arts), and a final showdown with Zeebad, where it is revealed that Sergeant Sam had contained the third diamond in his chest. Zeebad obtains all three diamonds during the course of the film, and attempts to freeze the Sun. Ermintrude, Brian, Dylan, and finally Dougal intervene to stop him; when they have done so, Zeebad is imprisoned in the carousel again and Zebedee is restored to his friends. The ice surrounding the carousel melts, freeing the people trapped therein; of them, Florence is comatose and must be revived by a desperate Dougal. A moose, whose color had been changed from brown to blue by Zeebad in the earlier scenes of the film, is restored to his true color by Zebedee. Dougal, who vowed to give up sugar when it seemed all was lost, forgets his former pledge completely, but now realizes the true value of his friends and the good qualities of selflessness, courage, and humility.