Tooty is Banjo's younger and adorable sister. She was taken away by Gruntilda in Banjo-Kazooie because Dingpot, Gruntilda's magic cauldron, told Gruntilda that there was only one girl prettier than her. And of course that girl was Tooty. Gruntilda immediately freaked out and planned to steal Tooty's looks by kidnapping her and using one of her machines to transport Tooty's looks into Gruntilda's body to make Gruntilda look thinner and prettier, also causing Gruntilda's looks to transport to Tooty's body, making her fatter and uglier.
Tooty wasn't seen in Banjo-Tooie, but there was a cameo of her on a milk carton.