Five high school freshmen: Olivia White (Bridgit Mendler), Mohini "Mo" Banjaree (Naomi Scott), Charles "Charlie" Delgado (Blake Michael), Stella Yamada (Hayley Kiyoko), and Wendell "Wen" Gifford (Adam Hicks) all meet after ending up in detention for different reasons. While there, they tap out a beat and play instruments, and Olivia sings "Turn Up the Music".
The next day, the band forms with Olivia as lead vocalist, Stella as lead guitarist, Mo as bass guitarist, Wen as keyboardist, and Charlie as drummer, but they are unable to choose a band name. At school, Olivia gets cornered by Ray Beech (Chris Brochu), lead singer of a rival band, Mudslide Crush, who begins questioning and bullying her. The rest of the band intervenes and Stella spits lemonade onto Ray. Ray refers to Stella as "lemonade mouth" and Olivia, the narrator, states: "And that is how we got our band name."
The band is later shocked to see that the unique lemonade machine, "Mel's Organic Lemonade", is scheduled for removal. The school principal Brenigan (Christopher McDonald) moved all extracurricular activities to the school basement to make room for a new gymnasium. When Mo sees her boyfriend, Scott Picket (Nick Roux), the guitarist of Mudslide Crush, heavily flirting with another girl, she is devastated and leaves him. Meanwhile, Olivia and Wen meet to work on a song together and bond. At the Halloween bash, Lemonade Mouth performs "Determinate." After the performance, Stella makes a speech opposing Brenigan's decisions and encouraging self-expression to the supportive crowd. Angered, Principal Brenigan shuts them down and calls them to his office the next day. He compliments their talent as a band, but forbids them from playing at school again. The next day, the band sees posters and banners all around the school supporting Lemonade Mouth, which raises their spirits. They also discover that "Determinate" is playing on the local radio. Shortly after, however, things go downhill: Mo gets sick, Charlie breaks his fingers when he closes angrily the cabinet where he keeps his drumsticks, Wen injures his eye when he loses control of a picture frame shocked at the news of his father getting married, and Olivia loses her voice when she yells at Wen for complaining about his father's girlfriend.
Stella calls everyone to the school, where she is protesting the removal of the lemonade machine. The group gets into a heated argument with one another and fight with the men removing the lemonade machine. Police arrive and they are brought to a holding cell to wait for their parents. After contemplating giving up, the band agrees to stick together and perform at Rising Star (an upcoming "battle of the bands" where the winner wins a record deal), even though they realize that they will not win the competition.
At Rising Star, Mudslide Crush performs "Don't Ya Wish U Were Us". Lemonade Mouth takes the stage and tries to perform "Determinate," but no one except Stella can play, due to their injuries. Discouraged, they start to leave. The audience then begins to sing "Determinate" together in support of the band. Fed up with Ray, Scott leaves Mudslide Crush and plays with Stella, joining Lemonade Mouth as they stand together in tears, watching the audience sing for them. In narration, Olivia reveals that although they did not win the competition, they won something bigger that night. Things start patching up again for the band: Mo and Scott get back together; Charlie, who had previously liked Mo, accepts this and decides to aim his attention at a girl who likes him; and Wen accepts his new stepmother.
At Wen's father's wedding, the man sitting next to Stella tells her that he was in a band once and now runs an organic lemonade company that has recently become very successful. Stella recognizes him as Mel, and he agrees to donate a music hall for Ms. Reznik and everything works out after all. Olivia mails the entire story to her father, whom she has not seen in years because he is in prison. The standard edition of the film closes with Lemonade Mouth performing "Breakthrough" at Madison Square Garden, with Scott as their new additional guitarist. The extended edition includes an interview with Moxie Morris on "All Things Musical", in which Mo and Scott's relationship is nearly exposed by Moxie in front of Mo's father, but they are saved by Olivia, who announces that she and Wen are the ones dating. Afterwards, the band performs "Livin On A Hire Wire".