Things take an ominous turn when Rosy and the other children of Nome begin to fall sick. Attempting to reassure Jenna by letting her eavesdrop on the doctor, Balto leads her through his secret passages underneath the hospital only to hear the news that all of the medicine has been used up; there is no more!

The nearest supply of medicine is over 600 miles away at the Nenana railroad terminal. Stormy weather is preventing the delivery of the medicine by ship or airplane. A dog sled team is the only hope.

Inspired by his love for Jenna and Rosy and his longing to be accepted by the townspeople, Balto rises to the occasion and wins the right to be on the sled team that will make the all-important journey to retrieve the medicine. However, he is once again rejected when a dirty trick by his arch rival Steele gets him kicked off the team. For Balto, this rejection hurts the most of all; he slinks off to the wrecked boat on the edge of town that he calls home.

Meanwhile, Steele and the sled team head off to Nenana and the medicine. They arrive in good time, pick up the medicine and quickly turn about to return home. However, the storm continues to worsen, and Steele eventually gets lost. When the team is overdue, frantic telegraph messages from Nome to Nenana confirm the townspeople's worst fear: the medicine has been lost!