Emperor Kuzco narrates the story about Kronk Pepikrankenitz, now chef and Head Delivery Boy of Mudka's Meat Hut. Pacha and his family visit at the same time that Hubie, Marina, Rocko, Petra, Beanie, Timmy, Pikatwo, Bonkers, Fawn and Buck do. It is also the day of Hubie and Marina's Anniversary as one whole year of being mates.
Suddenly Kronk recieves information that his father is visiting. Kronk's father always disapproved of young Kronk's culinary interests and wished that Kronk instead would settle down with a wife and a large house on a hill.
In a flashback, Kronk tells the story of how he almost had both of these. As unwitting accomplice to Yzma, the villainess of the first film who turned into a cat at the end of the original, but is now human again despite still having a tail, he goes along with her plan to sell sewer slime as a youth potion, along with 009 Domino. With the help of Hubie and his friends, Kronk makes enough money to buy the old folks' home from the old folks and put his large new home there. Eventually Yzma is revealed as a fake and the old folks chase her down and corner her at a bridge over a river full of crocodiles. To prevent them from attacking her, she transforms herself into a rabbit, but is then caught and taken away by a condor. Domino attempts to escape, but is stopped by Pikatwo. When Kronk realizes the old folks have sold everything they own in return for something which doesn't work, he gives his home back to them, as Hubie tells him he did the right thing.
Kronk, as camp counselor of the Junior Chipmunks at Camp Chippamunka he falls in love with fellow counselor Miss Birdwell; but when one of his Chipmunks, Tipo along with Beanie pull a prank to win the camp championships and is caught, Kronk protects them at the cost of alienating his love.
Kronk's father arrives and confusion ensues as Hubie, Marina and several supportive friends try to pass themselves off to him as Kronk's wife and kids, which results in a cheese fondue explosion. But in the end Kronk realizes that his wealth is in his friendships, and this finally wins his father's thumbs up and Miss Birdwell's love.
Hubie apologizes to Marina that their anniversary wasn't what he hoped it would be. Marina tells him that he has nothing to be sorry for and that their day was wonderful, despite all the chaos.
Meanwhile, just outside the house, Yzma is in the condor's nest with two eggs, which hatch and presumably attack her before the credits roll.