Lady first encounters the rat while she is running happily in the backyard. She sees it, growls, and chases after it, causing it to scatter through a hole in the fence.
The rat has a catalytic role in the climax of the film when it comes back to Jim Dear and Darling's house through the fence hole, while Lady is tied to her doghouse on a rainy night. While she barks at it, Aunt Sarah tells her to shush. Tramp hears her barks and she tells him that there's a rat in the house. He follows it to Jim, Jr.'s room just in time before it can harm him. They engage in a fight until at one point, it climbs to the top of Jim Jr.'s crib, looking to escape. Tramp chases it off while overturning the crib by accident, waking Jim Jr. and making him cry. Finally, Tramp manages to corner it behind the couch and kill it.
Having been alerted by the commotion, Aunt Sarah arrives and, not seeing the rat, mistakenly believes that Lady and Tramp had attempted to harm Jim Jr., promptly locking Lady in the cellar and sending Tramp off to the pound. However, as soon as Jim Dear and Darling return, Lady shows them the dead rat, clearing Tramp's name.
In an early script, the Rat's name was Herman. Also, Lady fought it instead of Tramp.
The Rat is the only antagonist in the film that doesn't make any sound whatsoever other than a few squeaks, while it was being attacked by Tramp.