When the Penguin was born, it was his parents, the Cobblepots, who screamed as they saw their newborn child. Even more startling, as they had their newborn son put into a cage, was how he treated their cat as it innocently purred its way near the cage only to be grabbed by the child's flipper-like hands. They take him to the Gotham park and dump him into the river. He makes it at long last to the foot of an abandoned arctic theme attraction and is adopted by its resident penguins.
Thirty-three years later, at a Christmas tree lighting ceremony in Gotham City Square, Penguin orders his circus sideshows (The Red Triangle Gang) to attack Gotham in a raid for Max Shreck. A giant present rolls near the civilians as Max makes an impromptu speech. Suddenly clowns, and other circus people, pop out of the present and begin attacking civilians. An organ grinder walks out of the present and fires upon Max, his son, and the mayor with an organ machine gun. They all duck as the organ grinder blows away the ornaments on the Christmas tree in the square.
After a short time the Organ Grinder and several other members of the Red Triangle Circus Gang approach Max and the others. "We want the big guy," the organ grinder says, "The one who runs the show." When the mayor gets in front and asks what they want, he is knocked unconscious. The Organ Grinder reveals that they want Max. Chip gets in front of his father saying, "Then you'll have to go through me." The men then point their weapons at Chip and mock him. Chip tells his father, "Dad go! Save yourself!" Max does as his son says and runs.
However, Max doesn't escape capture as he falls through a grate in the alley and finds himself inside the Arctic display at the Old Gotham Zoo, surrounded by the clowns and goons on one side, an army of penguins on the other, and a squat bird-like man called the Penguin in front of him. Max realizes that what he has heard about this person living in the sewers is true as his initial impression of the man leaves him briefly speechless.
The Penguin says he's been living in the sewers for too long and needs to go topside to make himself known and respected, not to mention to find out who his parents were. Max wants the Penguin to give him a good reason why he should help. Penguin gives him a reason in the form of evidence of Shreck's dirty dealings that he has been collecting over the years; a lagoon of toxic waste from his chemical plants, shredded documents that he had reassembled of all the firetraps in Gotham Shreck owned, even the hand of his former partner Fred. Max realizes how incriminating this evidence could be, especially that of Fred, and decides he could work to give the Penguin what he wants in exchange for a partnership. Penguin shakes Max's hand to seal to deal, only he shakes it with Fred's hand.
The following day, Max Shreck oversees the Penguin's public appearance in Gotham City as he "rescues" a child that has been kidnapped from a crowd of people gathered in the square by a circus acrobat from the Red Triangle Gang. He helps protect the Penguin's privacy at the Hall of Records as he is "looking" for the records of his parents, when actually he is also looking for records of all firstborn sons in Gotham. The next day, the Penguin visits the gravesite of his parents, the Cobblepots, and reveals his name as being Oswald Cobblepot. As part of his plan of gaining acceptance and media attention, he tells the reporters that though he may not understand why his parents had abandoned him, he has forgiven them.
At the Penguin's new hideout, Max Shreck bribes him with a fish to go downstairs with him, where he shows that the storefront has been turned into a campaign office for Oswald Cobblepot to be mayor. Max tells the Penguin that though they have missed the regular elections, he has the power and the signatures to have the current mayor removed from office. All he needs from the Penguin is to get his Red Triangle Gang to stir Gotham City into a foaming frenzy over the mayor's inability to deal with crime. But the Penguin is more interested in fulfilling his plan with his list of all the firstborn sons. Max tells Penguin that as mayor he would have power and control over the whole city, and even have all the women he wants. Upon hearing about the women, the Penguin is convinced to go along and make the citizens of Gotham City realize that they truly need him, Oswald Cobblepot, as mayor.
That night, Batman deals with members of Penguin's Red Triangle Gang in Gotham, who wreak mayhem while the Penguin casually walks about looking as if he's simply doing "upstanding mayor stuff" like touring the riot scene and gravely assessing the damage. During Batman's encounter with Penguin to find out what his actual game plan is, a mysterious woman in a cat costume appears, doing her backflips toward them, greeting the two outside Shreck's department store with a "meow" just before the store explodes and she disappears. Penguin says, "I saw her first", and activates a helicopter umbrella to hover away.
After a televised speech the following morning, the Penguin finds the Catwoman in his hideout above his campaign office, curling up on his bed with her cat, stopping the Penguin from making any advances on her. She wants to help him destroy Batman, but decides that his plan to turn the Batmobile into "an H-bomb on wheels" would simply give him power as a martyr. To destroy Batman, she says, they will have to turn him into something he hates -- them. Penguin doesn't trust Catwoman enough to let her join him. She decides to take his pet bird and make it look like she swallowed it whole. Penguin decides to use a bladed umbrella on her pet cat, which causes her to let his bird fly away from her mouth and allows her cat to be free. With them both equally threatened by what each other would do, Penguin allows her to join as he sees a plan being formed.
The Penguin kidnaps the Ice Princess and leaves a bloody Batarang at the crime scene, hoping for Batman to show. Batman finds the Ice Princess tied up in a chair, hidden in an abandoned building. Upon freeing her, he fights Catwoman again, who then grabs the Ice Princess and heads for the roof, saying, "Gotta run! Girl talk!" When he reaches the roof, Catwoman disappears and the Ice Princess is left alone standing on the ledge of the roof...until Penguin throws an umbrella that opens up and unleashes a cloud of bats that makes her fall onto the switch near the Christmas tree, unleashing bats caged up in the tree. Penguin disappears, and Batman is knocked down onto a ledge by police gunfire, where the Catwoman again gets frisky with him in the hopes of striking him with her claws. Batman knocks her off him and activates his bat glider wings to fly down to his Batmobile.
As Catwoman continues to watch the pandemonium down in the streets with the bats scaring away the people gathered to watch the Christmas tree lighting, the Penguin appears to make a rather indecent proposal to her for a more intimate union. She tells him she doesn't even like him enough to scratch him. Offended by her response, Penguin uses one of his helicopter umbrellas to carry her away while its strap strangles her.
Upon Batman entering the Batmobile, the Penguin appears on the viewscreen and says, "Gentlemen, start your screaming!" The Batmobile kicks into high gear and tears through the city, out of Batman's control, plowing through parked cars and causing all sorts of mayhem. While the Penguin continues to taunt Batman as he steers the Batmobile, Batman locates a device underneath his vehicle that's receiving the signals to controlling the rigged Batmobile that the Red Triangle Gang managed to get their hands on, and shuts it off. The Penguin roars in anguish as Batman regains control of his vehicle and manages to escape.
Though the Penguin fails in destroying Batman, he at least has succeeded in destroying the people's faith in both Batman and the mayor. Max encourages him to accept this achievement as victory before he takes the podium and addresses the crowd gathered at the Gotham City square, ready to hear how he will seek to gain the glory of Gotham City. During his speech, however, Batman accesses the P.A. system and broadcasts the comments Penguin made to Batman about playing "this stinkin' city like a harp from hell". The crowd hears this and turns against Penguin by throwing eggs and tomatoes at him. He looks at Max, hoping that he will bail him out, and Max gives him a look that says the Penguin is on his own at this point before he departs. The Penguin reacts by shielding himself with an umbrella and then using its machine gun to scare the crowd away while he runs off to the park and escapes by jumping into the river. He reappears in his Arctic display hideout at the Old Gotham Zoo to reveal his new plan to the Red Triangle Circus Gang, shooting one of the clowns for daring to question it.
Later on, at a party Max Shreck holds at his slightly-renovated department store, which Bruce Wayne and Selina Kyle also attend, an explosion rips through the floor and the Penguin emerges in his duck craft, telling the crowd that his gang is kidnapping all the firstborn sons of Gotham City right now. He now takes Max's son Chip as his hostage, but Max pleads for the Penguin to take him instead, telling him he's the one the Penguin wants to see up to his eyeballs in his own sewage. The Penguin favors the exchange and takes Max to his Arctic display hideout at the Zoo, where he is put in a cage until he is cast into the same toxic waste that his chemical plants have produced.
Meanwhile, children are being gathered up and collected in a train of cages. The driver of that train tells the rest of the gang to hurry up when he looks forward and sees the shadow of Batman in a flash of light before he is violently pulled out of the vehicle. The Organ Grinder's monkey returns to the Penguin with a note from Batman, saying that the children won't be able to attend. This enrages the Penguin to the point where he now sends an army of penguins equipped with missile launchers to gather at Gotham City Square and destroy the whole city.
The Penguin watches excitedly as his army has gathered in the city square, waiting for the launch countdown to reach zero. Then suddenly the penguin army retreats and heads away. The Red Triangle Gang also indicate that a vessel is coming, and slowly retreat to save themselves, knowing that it must be the Batman. Penguin tries to make a run for it in his duck craft by riding it to the surface, but Batman cuts him off by riding the Batboat to the surface and crashing on top of the duck craft.
After Batman gets out to look for the Penguin, he jumps toward the Dark Knight and attacks him, saying he's only jealous of not being a true freak and having to wear the mask. Then the Penguin sees that his army of penguins are now gathered around his hideout at the Arctic display, all under Batman's control. Penguin now fights Batman, trying to get the controls out of his hand and succeeds in doing so in order to activate it. The missiles now launch and strike the structures all around the Old Gotham Zoo. The Batboat also opens a hatch where a cloud of bats surround the Penguin, causing him to fall to his death inside the Arctic display, landing in the water.
As Batman enters the Arctic display and witnesses Catwoman shock Max Shreck to death by holding onto a power line while giving him a "kiss" with her electric stun gun, the Penguin emerges from the water, bleeding to death. He goes over to his collection of umbrellas to pull out the one with which he hopes to kill Batman. On pressing the button, he curses as he finds out he picked "the cute one". Penguin tells Batman he will kill him later, but now he needs to get a drink of nice cold water. He collapses as he heads back toward the water, and then a group of penguins act as pallbearers to carry the Penguin's dead body into the water for a burial.
The Penguin rode around in a duck craft that could travel on water and on land. He also used one of his helicopter umbrellas to escape.
The Penguin was armed with various types of umbrellas, some which fired machine guns and some which transformed into helicopters.