Peter McCallister [Jason Beghe] finalizes a divorce from his soon-to-be ex-wife Kate McCallister [Clare Carey], and breaks the news to their children Buzz McCallister [Gideon Jacobs], Megan McCallister [Chelsea Russo], and Kevin McCallister [Mike Weinberg] that he and his wealthy girlfriend, Natalie Kalban [Joanna Going], will be hosting a royal family at her mansion for Christmas. He invites everyone to join the festivities, but the kids aren’t sure about spending the holiday in a palace-like setting. After a moment of pressure from Buzz, Kevin eventually agrees, curiosity and a taste for the mansion’s opulence drawing him in, while the others weigh the consequences of this unusual invitation.
The very next morning, Kevin is left in the care of Natalie's staff—Mr. Prescott [Erick Avari] and Molly [Barbara Babcock]—while Peter and Natalie step out. Kevin quickly spots the return of familiar trouble: Marv Merchants [French Stewart] and his partner-in-crime Vera [Missi Pyle] skulking around the house. When Kevin tries to get Mr. Prescott’s attention through the intercom and fails, he manages to fend off the intruders by flooding the mansion. Peter and Natalie return and, understandably, doubt Kevin’s tale; Mr. Prescott even claims nothing suspicious happened. Kevin also notices that the security cameras have been turned off during the break-in, which strengthens his suspicion that someone inside the mansion is involved. To lift spirits, the trio decorates their Christmas tree, though a team of professional decorators later re-trim it at Natalie's request, underscoring the tension between Kevin’s instincts and the adults’ perceptions.
With the royal visit looming, the house is buzzing as preparations begin for a party welcoming the royals. Peter and Natalie head out to collect them, while Kevin keeps a wary eye on Marv and Vera, who are now disguised as caterers. He manages to trap Mr. Prescott in the freezer and overhears Marv and Vera’s plan to kidnap the prince for ransom, forcing the criminals to flee out a second-story window. The royal family’s flight is canceled, so the party becomes a celebration of the engagement between Peter and Natalie, a decision that complicates Kevin’s mission to protect the truth. In a chaotic turn, Kevin inadvertently disrupts the party by colliding with guests and toppling an ice sculpture that turns out to be the frozen Mr. Prescott.
Peter’s anger fuels a rift, and he sends Kevin to his room, unconvinced of the kidnap plot and accusing him of sabotaging his chance at happiness with Natalie. Natalie, hurt and defensive, warns Kevin that poor decisions could hurt everyone’s future. Yet Kevin refuses to back down, determined to shield the prince from danger.
Taking matters into his own hands, Kevin rigs the house with a set of booby traps designed to outwit Marv and Vera. When the couple returns to the mansion, Kevin locks Mr. Prescott in the basement, and a broader truth emerges: Molly is the real mastermind behind the scheme, and she is Marv’s mother. Prescott, who admits to resenting his job and Natalie’s influence, reveals that Molly supplied the smart remotes that allowed the cameras to be turned off during the break-in. Kevin and Prescott eventually share a genuine moment of understanding, apologizing for their misjudgments.
A tense chase ensues as Kevin escapes through the dumbwaiter, while Marv and Vera pursue him through the house, taking a series of missteps as Kevin deploys his traps. Molly escapes the elevator, and Prescott escapes via the same shaft, before calling the police to report the disturbance.
At the airport, Peter senses something amiss back at Natalie's mansion and hitches a ride back to check on Kevin after a suspicious phone call from Kate about Kevin’s whereabouts. Kate, Buzz, and Megan rush toward the mansion, spurred by frantic messages and a shared concern for Kevin. Kevin further unsettles Marv by using an altered recording of his voice to provoke a quarrel between Marv and Vera. A climactic moment follows: Kevin directs a remote-controlled plane to strike Marv in the groin, sending him, along with Vera, tumbling down a staircase. The criminals are eventually ensnared when Kevin buttons up a secret wall switch and launches them onto a chandelier, leaving them unconscious from the fall. Molly, who had escaped control, is nabbed by Mr. Prescott, who also makes his way out through the dumbwaiter shaft and promptly calls the police.
When Peter, Kate, Buzz, and Megan arrive, Kevin—assisted by Buzz and Megan—thwarts Marv and Vera’s final escape. The royal family and Natalie soon arrive, and the plot to kidnap the prince is laid bare for Natalie's astonishment. Mr. Prescott, following Kevin’s counsel, resigns from his post as Natalie’s butler. Realizing that Natalie’s relationship with Peter was built on infatuation rather than lasting love and was interfering with his responsibilities as a husband and father, Peter breaks up with Natalie and reconciles with Kate and their children. In a heartwarming turn of gratitude, the royals join the reunited McCallisters for Christmas, and Natalie faces the reality of the family she stepped into.
The holiday ends on a note of restored family harmony, with Kevin’s quick thinking saving the day and the McCallister clan embracing a quieter, more grounded Christmas together, while the royal visit becomes a fond if complicated memory for Natalie.
