Banjo-Kazooie is set in the Spiral Mountain and follows the story of Banjo, a male brown honey bear, and Kazooie, a female red-crested Breegull who is always kept in Banjo's backpack. The game begins when a foul-tempered witch named Gruntilda learns from her cauldron Dingpot that Tooty, Banjo's younger sister, is more beautiful than her.Jealous, Gruntilda creates a machine that can transfer a person's level of beauty to another, which she intends to use with Tooty.She then abducts Tooty from Banjo's house while he is sleeping.In response to the kidnapping, Kazooie wakes Banjo up and the two set out to rescue her. Banjo and Kazooie learn from Tooty's friend, Bottles the mole, that she was captured by Gruntilda and suggests they need some training to collect musical notes and jigsaw pieces to progress through Gruntilda's lair. Along the way, they are aided by Mumbo Jumbo, a shaman and Gruntilda's former teacher.
By the time most of the musical notes and jiggies are gathered, Banjo and Kazooie face Gruntilda in a trivia game show named "Grunty's Furnace Fun". The game presents questions and challenges related to certain aspects of the game. After going through several game boards, the two win the game and Gruntilda flees. Reunited with Tooty, Banjo and Kazooie return home and celebrate their victory with their friends and a barbecue. However, Tooty reminds everyone that Gruntilda has fled and orders Banjo and Kazooie to defeat her.
The duo returns to Gruntilda's lair and reach the top of the tower, where they face a battle with Gruntilda. With the help of some friendly creatures called Jinjos, Banjo and Kazooie defeat Gruntilda, trapping her underneath a boulder. Returning to their home, Banjo and Kazooie go on vacation at a beach with their friends and celebrate their victory. The game ends with Gruntilda swearing revenge against Banjo and Kazooie and calling for her henchman Klungo to move the boulder that is covering her.