Little Blue is an intrepid little character who lives in an upturned boat with his mum and dad off the coast of Southern Australia. His friends are Rocky, a baby rockhopper penguin with a bright yellow crest, and Joey, a little kangaroo. His enemies are Fick and Fin the wisecracking sharks, and Big Grey and his gang of burly kangaroos.

Little Blue's cousin Penni is visiting and she thinks she is terribly funny. Little Blue's fed up with having jokes played on him. Now it's Penni's turn to have a joke played on her!