Ten years after the events of the first film, Giselle, played by Amy Adams, along with her husband Robert (portrayed by Patrick Dempsey) and their daughter Morgan, are enjoying a blissful life with their baby, Sofia. However, the hustle and bustle of Manhattan is beginning to wear on them, prompting Giselle to make the decision to relocate to the suburban town of Monroeville. Unfortunately, this move brings a series of disappointing experiences. Their new home requires extensive renovations, Robert has to commute for work, and Morgan feels alienated at her new school.
Unexpectedly, King Edward and Queen Nancy (played by Idina Menzel) visit from Andalasian via a well located in their backyard. As Sofia's godparents, they gift her a magical, wish-granting wand. Shortly after, Giselle encounters Malvina Monroe (played by Maya Rudolph), the self-important head of the town council, who is organizing a fairy tale-themed ball where Malvina's son, Tyson (portrayed by Kolton Stewart), has been chosen as the prince. In an effort to help Morgan integrate, Giselle tries to have her elected as the ball's princess but inadvertently embarrasses her, leading to a fracture in their relationship.
Seeking advice from her chipmunk companion Pip (voiced by Griffin Newman), Giselle wishes for her family’s life to become that of a "perfect fairy tale" using the magical wand. The following day, Monroeville is transformed into a whimsical realm known as Monrolasia. In this enchanted world, Morgan revels in their new lifestyle, and Robert perceives himself as a courageous adventurer. Unfortunately, Malvina takes on the role of the malevolent queen endowed with magical powers, and Giselle begins to show an alarming tendency for arrogance, deriving pleasure from mistreating Morgan. Realizing she is morphing into a cruel stepmother, Giselle consults the wand's instruction scroll, which reveals that her wish is depleting Andalasia's magic to fabricate a fairy tale existence and that the transformation will become irreversible after midnight.
Malvina, aware of the wand's power, conspires with her henchwomen, Rosaleen and Ruby (portrayed by James Monroe Iglehart and Jayma Mays respectively), to seize it. However, the scroll clarifies that only a “true Andalasian” can harness the wand’s magic. Giselle realizes that without it, she risks succumbing to her wicked alter ego, and she persuades Morgan to save them by sending her through the well to Andalasia.
In Andalasia, Morgan discovers that the kingdom’s magic flows into Monrolasia through a vortex; once the spell becomes permanent, Andalasia will cease to exist. With guidance from Nancy and Edward, Morgan learns to tap into the magic of their cherished memories to remind Giselle of her true self. After reuniting with Nancy, the magic revitalizes a childhood drawing of their family, infused with memories, and they embark on a quest to find Giselle.
Consumed by her dark persona, Giselle challenges Malvina for Monrolasia's royal title while dispatching Pip, now transformed into a feline, to retrieve the wand and sending Robert on a seemingly hopeless pursuit for Morgan. At the ball, a magical duel unfolds between Giselle and Malvina, with Giselle initially overpowering Malvina due to her possession of the wand. Meanwhile, Morgan teams up with Nancy and Tyson to intercept the duel. In a moment of desperation, Morgan throws her drawing to Giselle, who tears it apart, yet the inherent magic ignites, revitalizing precious memories and restoring Giselle to her former self.
In a tragic twist of fate, Malvina seizes Morgan as a bargaining chip, demanding the wand, which Giselle reluctantly relinquishes. As midnight approaches, Andalasia begins to vanish, threatening Giselle’s existence. With Robert and Tyson racing to the clock tower to prevent the final strike of midnight, Giselle reminds Morgan of her true Andalasian nature, thus enabling her to wield the wand. Morgan makes a heartfelt wish to return home with her mother just as Malvina attempts to manipulate the ticking clock.
Upon awakening, Morgan finds herself back in their house, where everything appears normal; the spell has been successfully reversed. Only she and Giselle possess memories of the enchanting events, leaving everyone else believing it was merely a dream. In a gesture of goodwill, Giselle apologizes to Malvina for disrupting her plans, and Malvina graciously allows her to join the town council. Fast forward to a brighter future, Robert has now opened his practice in Monroeville, Morgan and Tyson are dating, and Nancy and Edward make another visit to the Philips, who are now reveling in their joyful life together.
