Four years after successfully navigating their daycare business and sending Harridan away, Charlie and Phil embark on a heartfelt trip down memory lane with their children, Max and Ben, to Camp Driftwood, the very summer camp where the two friends enjoyed carefree moments back in 1977. Upon their arrival, they are shocked to discover that Driftwood has fallen into disarray, losing its former luster and charm. Determined to restore the beloved camp to its glory days, Charlie and Phil strike a deal with the young man who inherited it after the original owner and counselor vanished on a 30-year vacation, leaving only bus driver Dale behind.
However, their nostalgic adventure quickly spirals into a series of comedic mishaps as their childhood adversary, Lance Warner, who now runs the lavish rival camp Canola, sets his sights on acquiring Driftwood with the intent to demolish it. He throws down the gauntlet for the upcoming Camp Olympiad, but Charlie, still nursing old wounds from past defeats, initially refuses to participate. The chaos begins with Max accidentally releasing a skunk, and Phil's reckless use of a match during a blackout culminates in a spectacular explosion, leading to most parents pulling their kids out and demanding refunds. With their finances dwindling and only seven campers remaining instead of the expected 35, Charlie and Phil find themselves in a precarious situation.
In search of guidance, Charlie turns to his military father, Colonel Buck Hinton, to instill some discipline in the kids. As they attempt to bring order to the camp, the situation worsens when Canola poaches the 28 campers who defected from Driftwood, making it even harder for Charlie and Phil to maintain their vision. Just as things seem hopeless, Colonel Hinton arrives and gains temporary control over the campers, but Canola stages a second attack, challenging Buck to reclaim their stolen camp flag and restore honor to Driftwood.
As Lance's taunting rekindles Charlie's competitive spirit, he finally accepts the challenge of re-establishing the Camp Olympiad, enlisting the campers in rigorous training under Buck's strict military approach. The kids admire Buck’s no-nonsense style, but Charlie begins to worry about the tough image his son is adopting and the painful memories of disappointing Buck himself. When Lance's goons torment his son, Charlie's realization about his own unresolved issues with Buck leads to a confrontation, and Buck's departure leaves the camp in further chaos.
Upon Charlie’s return, he discovers that Camp Canola has been accused of cheating, igniting a scandal that could change the tide of the competition. Seizing the moment, Colonel Hinton concocts a clever strategy to ensure Driftwood comes out victorious. The tension culminates as Max competes against Bobby J. in the baton relay and Ben faces an uphill battle during the climbing course, showcasing resilience despite challenges. In a thrilling climax, Ben’s resourcefulness and determination shine through as he exposes Lance’s dishonest tactics, ultimately clinching Driftwood's long-awaited victory by hitting the bell.
With Lance consumed by rage over his son's blunders during the competition, the repercussions lead to a comical yet tragic irony as they suffer a spectacular collapse, burying their trophy case in the process. This event rekindles interest from parents who previously withdrew their children, as they now recognize the virtues of Driftwood’s unconventional approach to camp life. In a turn of events, former Canola families vie to enroll their children at Driftwood, foreshadowing the camp's rejuvenated spirit and saving it from financial disaster.
In the aftermath of these tumultuous events, Buck and Charlie find a common ground, finally reconciling years of misunderstandings and hostility. As the summer settles into a heartwarming conclusion, the campers set their sights on winning the coveted trophy at the next Olympiad, signaling a triumphant new chapter for Camp Driftwood filled with hope, friendship, and renewed bonds.
