We give a complete description of the defining ideal \(\mathcal {R}(I)\) of the Rees algebra of any monomial ideal I minimally generated by three monomials in two variables. We give a Gröbner basis and a complete explicit description of the minimal free resolution of \(\mathcal {R}(I)\) based on arithmetical properties of the generators of the ideal I. We also present algorithms for the computation of \(\mathcal {R}(I)\) and its minimal free resolution. These results extend and generalize previous work by Cox and by Cortadellas and D’Andrea on parametrizations of monomial plane curves.