Plot
In the Icelandic small town of Húsavík, longtime friends Lars Erickssong and Sigrit Ericksdóttir make music together as the band Fire Saga, with Lars dreaming of winning the Eurovision Song Contest. At the local bar where they regularly perform, the only song the audience wants to hear is the suggestive nonsense song "Jaja Ding Dong". Lars' widowed father Erick and Sigrit's mother Helga disapprove of their partnership, with Helga saying that Lars is holding Sigrit back and that she will never hit the "Speorg note"—a note that can only be sung when being your truest self—when singing with him. The pair apply and are selected to take part in Söngvakeppnin, the Icelandic preselection for Eurovision. Sigrit, who believes in the old Icelandic tradition of elves (although Lars doesn't), asks the elves for help to get them into the contest in the hope that if they win, Lars will return Sigrit's feelings for him.
Fire Saga's performance at Söngvakeppnin goes wrong due to technical problems. A dejected Lars declines to attend the boat party thrown for all the finalists and sits on the dock as Sigrit tries to console him. The boat suddenly explodes, killing everyone on board and leaving Fire Saga as the only surviving contestants and thus winners by default. Lars and Sigrit arrive in Edinburgh, Scotland, where Eurovision is being held. Once there, they struggle with a new remix of their song and Lars' elaborate staging plans. Alexander Lemtov, the Russian representative and a favourite to win the contest, invites Lars and Sigrit to a party at his house. He introduces them to other contestants, including the Greek entrant Mita Xenakis. Lemtov and Sigrit spend the night together, as do Lars and Mita, although neither pair becomes intimate. At their rehearsal, Sigrit expresses her disdain for the new clothing and remix and asks Lars to revert the changes. Back at the hotel, Lars overhears Sigrit working on a new song and presumes that it is a love song for Lemtov.
Fire Saga's semi-final performance initially runs well, but is botched by an accident involving Sigrit's scarf getting caught in a hamster wheel prop, which rolls off the stage and into the audience. The two recover and finish the song, but are met with deafening silence and scattered laughter. Believing that they have become a laughingstock, they exit the stage, unaware that the crowd has applauded them for their persistence in finishing the performance, and that they have qualified for the final. As Lars prepares to return to Iceland, Sigrit pleads with Lars to stay but fails, prompting her to break up with him, while also revealing that she wrote the love song for Lars.
Out at sea, Lars confesses his love for Sigrit to Erick, before leaving for Edinburgh upon learning that Iceland is in the final. He hitches a ride with Victor Karlosson, governor of the Central Bank of Iceland and one of the Icelandic organisational team members, who attempts to kill Lars. Victor reveals that he blew up the boat at Söngvakeppnin for fear that if Iceland wins Eurovision, they would have to host the following year's contest which could lead to the country's bankruptcy. Unseen elves save Lars by killing Victor with a thrown knife in the back, allowing Lars to return to Edinburgh and proving to him that elves do exist. Arriving at Edinburgh, he finds that all the taxi drivers are at home watching the contest, so he persuades four American tourists in a rental car to drive him to the venue. Interrupting the performance, he encourages Sigrit to ditch their entry and perform the song she has written for him, "Husavik". Lars plays the song on the piano with Sigrit singing, culminating with a Speorg note, before they share a kiss onstage to a standing ovation. Backstage, Lemtov is happy for the two and accepts Mita's invitation to move to Greece with her.
Fire Saga is disqualified for changing their song during the contest, but both Lars and Sigrit realise that their relationship is more important than winning the competition. Lars and Sigrit return to Húsavík, where they are met by a cheering crowd of townsfolk. Some time later, Lars and Sigrit marry and have a baby. They return to performing in the local bar, this time at Erick and Helga's wedding reception. They ask if anyone wants to hear their Eurovision song, but the crowd, now including the four American tourists, once again demands "Jaja Ding Dong".