In a gritty and alternate 1985 the glory days of costumed vigilantes have been brought to a close by a government crackdown, but after one of the masked veterans is brutally murdered, an investigation into the killer is initiated. The reunited heroes set out to prevent their own destruction, but in doing so uncover a sinister plot that puts all of humanity in grave danger.

Two years after the events of the first film, Larry Daley, former night guard at the American Museum of Natural History, now runs his own direct response television company that sells inventions based on his experiences. He travels to the museum, discovering most of the exhibits will be moved to the Federal Archives at the Smithsonian Institution and replaced with holographic information providers. The Tablet of Ahkmenrah is to remain in the museum, leaving most of the exhibits without the ability to come to life at night. After the exhibits are moved, Larry receives a phone call from Jedediah, who informs him that Dexter the monkey stole the tablet and took it to the Smithsonian, bringing every exhibit in it to life. Larry travels to Washington, DC, navigating his way to the archives with help from his son Nick while posing as a night guard.