The yearly Panathenaea, a dance competition, is being held in Rhumba, "the dance capital of Greece". A young girl, Althea is watching the couples. As she celebrates the winning couple, another girl, Ocea, comes and bullies her, saying she can never be a dancer because she does not have a partner and that no one would want to dance with a loser like her. Later on Althea, now much older, bumps into Hercules and drops her necklace. Hercules goes after her, he finds her signing up for the Panathenaea, but Ocea bullies her again saying she needs a partner. Hercules says that he will be her dance partner.
Hercules and Althea both sign up for the competition, and go back to Althea's house so they can practice for the competition. At her house, Althea's father says Hercules can stay in the barn, but only if he does some work for him. Later on in the barn, Althea shows Hercules some dance moves she has been practicing and Hercules tells her they will need help. They both search but are unable to find a dance teacher. As Hercules and Althea talk about the coming competition, they wonder where they are going to get a teacher from. As they ponder on their situation, they hear music and go looking for the source. They find a woman, The Widow Twanky, who tells them she is their new dance teacher.
Hercules asks how she knew they were looking for a dance teacher. Twanky then begins singing about dancing. Twanky begins teaching them how to dance by telling them that rhythm is everywhere, they just need to look for it. They look out the window but Althea says she cannot hear anything. Hercules point out a man sawing a log and Twanky indicates the clanging from the man working on his anvil. As they listen, Twanky tells them that, "Rhythm is life. And the rhythm of life... is a powerful beat". She begins dancing and encourages the others to join in. Later that night Althea tells Hercules about her mother, that she died when Althea was four. A man comes and tells Hercules that the Magistrate of the Rhumba wants to see him.
The Magistrate tries to get Hercules to pull out of the competition so he can judge it instead. Hercules says that he and Althea have no intention of losing the competition. The following day, Hercules and Althea are traveling across a bridge when the ropes are cut by the Magistrate's men, and are left stranded. They manage to escape, but are late for their dance lesson with Twanky, who is not very happy. After seeing Hercules' biceps, she lets them off for their tardiness.
She begins teaching them some more dance moves, Althea at first finds it difficult, but after a quick pep talk from Twanky, she manages to perform well. After Twanky does a few twirls across the room, she tells Hercules it is his turn, but he refuses saying, "I don't twirl". She says, "Of course you do, you silly boy. You do it everyday [sic?]". The Widow then begins fighting with Hercules, telling him that in its essence fighting is like a dance. She tells him to pretend that she is Iolaus, and they do some more fighting. She then tells them it is time to learn the "Twanky Twiddle".
After much practicing, Althea and Hercules prepare for the contest. When Althea, falls she tells Hercules, "I don't think I've got it in me". Twanky says that is exactly what her mother said. Twanky reveals that Althea's mother was a pupil of hers and that she was the greatest dancer the town had ever seen. She tells Althea that her mother had a passion for dancing burning inside her and Althea shares that same passion. Althea runs off to confront her father about why he never told her that her mother was a dancer. He tells her that her mother loved to dance and they could have won the Panathenaea, but they were banned from the contest forever, and her mother died of a broken heart, and he forbids Althea from entering the contest. Hercules tells her father that if he does not let Althea dance he will break her heart. Althea runs off to see The Widow and finds her tied up.
The Magistrate's men come out of hiding and are about to get Althea when Hercules arrives, fights them and saves Althea. Hercules tells Twanky that he and Althea must get to the competition, but Twanky refuses to let Hercules go to the dance in his normal attire, dragging him off to get a new costume for the dance. At the contest, Althea's father apologizes for not telling her the truth, and that Hercules is right and she must follow her dream. He tells her it is what her mother would have wanted, telling Althea to, "finish what she started". As the Magistrate is trying to end the contest early, Hercules and Althea make a dramatic entrance. They perform their dance routine and the Magistrate tries to get them off the dance floor by sending his men after Hercules and Althea. Althea and Hercules use their dance moves to dispatch the men while dancing, going on to win the competition.