The film opens with a vibrant view of Hillwood, showcasing the children in joyous play while adults engage in their typical routines. One day, Sid catches sight of construction workers tearing down a house, which sets off a chain of events. Shortly after, Arnold and Gerald stroll back to their boarding house, deflated after losing a basketball match to the fifth graders with their ball now deflated. Just before entering, Arnold notices a crowd of neighbors in an uproar about something. Mr. Green, one of the neighbors, explains the situation: Mr. Scheck, the CEO of Future Tech Industries (FTi), has plans to purchase all the houses in Arnold's neighborhood to pave the way for a futuristic mall. With Mayor Dixie already backing the plans, the impending threat means that Arnold's neighborhood—and the friendships he treasures—are at risk of disappearing forever, including Helga's chance to confess her feelings to him.
The neighborhood is in an uproar as they contemplate their fate. That evening, Helga uncovers something startling: her father, Big Bob Pataki, is collaborating with Nick Vermicelli to build "Big Bob's Super Beeper Emporium" in Scheck’s mall. Helga pleads with Big Bob to consider the consequences of his actions, but he insists that profit and progress are worth the sacrifice, echoing Scheck's sentiment that "change is good." As the next day dawns, a colossal electronic billboard goes up, counting down the days until demolition begins, with Scheck promoting his visions of the future.
In a bid to save their neighborhood, Arnold organizes "Blockapalooza," a block party aimed at protesting FTi's plans. However, the event quickly turns chaotic when Scheck’s employees steal their permit, resulting in Arnold’s grandmother being jailed for her response to the police dispersing the crowd. As demolition day approaches, an increasingly disheartened Arnold worries about the destruction of friendships and businesses, all while Grandpa shares the boarding house’s historical significance dating back to the 1700s. He recounts the “Tomato Incident” from the Revolutionary War, where angry locals thwarted British forces using tomatoes.
Determined to find proof of the boarding house's historical importance, Arnold traces a document related to the event back to FTi, only to be obstructed by Scheck, who denies its existence. A mysterious caller dubbed "Deep Voice" later tips Arnold off about the document being locked in Scheck’s vault, leading him to enlist Gerald and a resourceful woman named Bridget for a stealth mission to retrieve the key from Vermicelli.
As Arnold and Gerald don disguises to gain access to a bar where Vermicelli is present, they gather important intel but narrowly avoid detection when the charade nearly falls apart. They then embark on a rooftop stakeout to swipe the key, which leads to a series of daring maneuvers to avoid detection by Vermicelli. After a thrilling escapade, Arnold retrieves the key, while Big Bob realizes he has unwittingly lost control of his own business to Scheck.
With their backup plan in place involving dynamite hidden in the sewer tunnels, Arnold and Gerald infiltrate FTi only to discover the document is no longer there. Scheck confronts them, revealing his family’s vendetta stemming from the Tomato Incident, and to their horror, destroys the document before their eyes.
Desperate, Arnold remembers the security cameras in the building and manages to capture video evidence of Scheck's wrongdoing. Just as he thinks hope is lost, he discovers Deep Voice is none other than Helga, who confesses her feelings for him in a breathtaking moment atop the tower. Their escape is then marred by a high-speed chase back to Hillwood as Scheck seeks to thwart them at every turn.
As the final showdown takes place, Arnold's community comes together. With the neighborhood at risk of destruction, Helga’s father joins forces with Arnold to confront Scheck. Amid a chaotic clash involving bulldozers and explosive plans to save their homes, Mayor Dixie ultimately decides to preserve the neighborhood as a historical landmark after witnessing the incriminating footage.
In a gripping finale, Scheck's attempts to silence Arnold backfire, resulting in his arrest while the residents celebrate their victory, although not without a few mishaps along the way. The triumph highlights the bond between Arnold, Gerald, and their friends, who reflect on their journey with newfound vigor. As the screen fades, Helga runs joyfully, encapsulating the spirit of resilience and unity forged throughout their struggle against change and loss, with Gerald humorously interrupting Eugene's victory song, concluding the movie on a lighthearted note.
