Plot
George, now living with Ted (The Man with the Yellow Hat) in his apartment in New York City, hears in the newspaper that the great magician, Piccadilly, is putting on a magic show with an elephant named Kayla. George attempts to show Ted the news, but Ted is late for a meeting with Mr. Bloomsberry.
Mr. Bloomsberry is retiring as the owner of the museum, and tells Ted that he is the only candidate to replace him because he couldn’t imagine letting anyone else own the museum besides him, and his son, Junior (the main antagonist of the first film), is now working as a cashier at a parking lot. On condition that Ted write a presentation on his future vision of the museum, to be delivered in one week to the Board of Directors. As Ted is in his office busy writing his charts, George comes by and shows him the poster for the magic show, though Ted refuses to take him today as he is busy working. After Maggie tells Ted that his loved ones need more attention than his career, Ted decides to take George to the magic show, and Maggie joins them.
When Piccadilly makes Kayla disappear, George goes looking for her and finds her in the basement of the theater. When Kayla seems sad, George cheers her up and starts playing with her, and they wander out of the building. When Piccadilly finds Kayla missing, he calls security, led by Danno Wolfe, assisted by Ms. Fisher. However, Danno quickly gets suspicious of Ted and George.
George takes Kayla to him and Ted’s apartment, where they see TV coverage of Kayla’s original home at an animal park in California, with her brother Tonga and sister Layla. When Ted finds Kayla in the apartment, he calls the theater to inform Piccadilly they have his elephant, but when the theater is closed for the day, Ted decides to return Kayla personally and George goes with him. On their way back to return Kayla, believing they’re planning to return Kayla home to California rather than the theater, George sees an advertisement for the “California Express” train, and him and Kayla head to the train station and board a boxcar. Ted finds them, but can’t get them off the boxcar before the train departs the station.
As they head west, Ted gets anxious when the train doesn’t even stop anywhere. Later, while Ted is asleep, George plays with Ted’s cell phone and unintentionally leaves a voicemail to the theater (speaking in Chinese), leading Danno to believe that George and Ted have kidnapped Kayla. Sometime after Ted wakes up, he fails to open the boxcar door in an attempt to get out of the train, so George and Kayla open the boxcar door for him and Ted falls out while trying to catch the pages of his presentation, which are blown away by the wind. Ted comes across a small train station in Humbleton, and uses a payphone, as his cell phone broke when he fell, to call Piccadilly to tell her that Kayla is fine, though doesn’t manage to complete the call as he unknowingly yanks the phone wire apart, making Danno more certain that George and him kidnapped Kayla, and he begins searching for them. Ted then catches up to the train on the stationmaster’s motorcycle. As George, Ted and Kayla continue to Grand Junction, Kayla’s movement causes the boxcar to separate from the rest of the train.
When it stops, they hit the road and a man in a flatbed truck gives them a ride. The next morning, however, Ted realizes they went the wrong way and attempts to head back east again. Meanwhile, misinformation spreads around New York of Ted and George abducting Kayla. George, Ted and Kayla meet a farmer named Dan and his daughter, Anna, after they help them move their truck out of the mud, and they invite the trio to spend the night at their farm to return the favor. Later that day, Ted reads about Kayla’s family in the newspaper, understanding why George brought them to California, and that everyone in New York thinks they’re kidnappers. To fix the mess, Ted decides to return Kayla to Piccadilly, but George and Anna become upset with him.
The next morning, Ted changes his mind but before they leave for Kayla’s home, Danno shows up in a helicopter, planning to recapture Kayla, but a pig throws Danno into a rain barrel and Kayla scares the pilot into flying away. George and company escape using a hollowed out school bus and they reach the animal park, where Kayla happily reunites with Tonga and Layla. However, Danno shows up again and arrests George and Ted, recaptures Kayla, and flies them back to the city in his plane. George, Ted and Kayla then escape by skydiving out of the plane, and they make it back to Piccadilly, who joyfully reunites with Kayla. However, Danno shows up once again. Kayla subdues him and throws him onto the stage’s trapdoor, which Piccadilly opens, dropping Danno onto the mattress below.
Ted gives his report to the Board of Directors. Despite his previous adventures preventing him from finishing his presentation, George gives him the inspiration, and Ted improvises the speech by saying that loved ones are more important than work and proposes ideas for the museum based on that idea, such as a Father and Son Day. The board is impressed and approves his appointment. In the last scene, George, Ted and Maggie are setting up a picnic in the park. Piccadilly comes by and reveals that Tonga and Layla have joined Piccadilly’s act, so Kayla and her family are together again, and his act is twice better.
