Scotland 1865. An old shepherd and his little Skye terrier go to Edinburgh. But when the shepherd dies of pneumonia, the dog remains faithful to his master, refuses to be adopted by anyone, and takes to sleeping on his master's grave in the Greyfriars kirkyard, despite a caretaker with a "no dogs" rule. And when Bobby is taken up for being unlicensed, it's up to the children of Edinburgh and the Lord Provost to decide what's to be done.

A hundred years ago in the Lammermuir Hills near Edinburgh, a little Skye terrier called Bobby is the devoted pet of Old Jock, a poor shepherd. When Jock loses his job because he is too old and infirm to work, he goes to Edinburgh, followed by the faithful Bobby. Before long the old man dies of pneumonia in a wretched lodging house and is laid to rest in Greyfriars' Kirkyard. Following Jock's death, Bobby spends his days begging food from Mr. Traill, the kindly owner of an eatinghouse, and playing with the local poor children. But by night the little animal avoids the crotchety caretaker of the churchyard, Mr. Brown, and keeps a vigil on Old Jock's grave. Eventually Bobby's charm wins over the caretaker and his wife, as well as most of the townspeople. Consequently, when the question of the dog's not having a license is brought to court, both Mr. Traill and Mrs. Brown insist upon paying for it. However, when the Edinburgh waifs also burst into court with the necessary funds, the Lord Provost decides that no one shall pay for the license; Bobby is to have the freedom of the city--at liberty to go where he pleases, including Old Jock's grave in Greyfriars' Kirkyard.