John Bennett, a man whose childhood wish of bringing his teddy bear to life came true, now must decide between keeping the relationship with the bear, Ted or his girlfriend, Lori.

Five years after the events of the first film, Lou Dorchen and Nick Webber have become Wealth and Celebrity, with Lou becoming a multi-billionaire and Nick being a successful music singer. At Lou's celebratory party, Lou is shot in the groin. Jacob (Lou's son) and Nick drag him to the hot tub time machine and activate it to travel back in time to find and stop the killer. When they awaken they find themselves ten years in the future, where Jacob is in charge of Lou's mansion. After determining that they are in an alternate timeline where Lou's killer is from this future, they go to their friend Adam Yates's home, only to meet his son Adam Yates Stedmeyer (Adam Jr.) who is engaged to a girl named Jill.