After completing their mission to capture and repurpose Jumba's experiments, Lilo, Stitch, Jumba, and Pleakley are celebrated as heroes by the Galactic Alliance. They are offered prestigious roles: Jumba returns to his old laboratory, Pleakley becomes chairman of Earth Studies at Galactic Alliance Community College, Stitch is named Captain of the Galactic Armada and commander of the BRB-9000, and Lilo is appointed the Galactic Federation's ambassador to Earth and guardian of the experiments.
The aliens initially decline the offers out of loyalty to Lilo, but she eventually lets them pursue their new adventures after seeing how strongly they long for them. Before they depart, Lilo gives Jumba her favorite Elvis Presley record, Pleakley a small rock to use as a paperweight, and Stitch a necklace bearing a Kū tiki.
Meanwhile, Gantu decides to break Hämsterviel out of prison as he abandons Experiment 625. Hämsterviel hatches a plan to build a new Stitch-like creature, whom he dubs Leroy, setting the stage for trouble that will pull the heroes back into action.
On Earth, Lilo tries to contact Stitch, but the only intergalactic videophone available is aboard Gantu's ship. She encounters 625 and renames him "Reuben" after he repairs the videophone, a moment that deepens their bond. Lilo then reaches Stitch through the BRB-9000, but Leroy, now in control of the ship, impersonates Stitch. Lilo sees through the ruse when she notices he is not wearing Stitch's tiki necklace, compromising the deception.
Realizing Stitch is in danger, Lilo has Reuben repair Gantu's ship. As the BRB-9000 heads toward a black hole, Stitch breaks free from his capsule and helps the others escape. He even disrupts the black hole's event horizon by tossing Pleakley's rock into it, enabling their escape.
Back on Earth, Leroy captures Lilo's scrapbook of the experiments and Mertle Edmonds. Lilo and Reuben head to Turo, but Hämsterviel has already taken over there and orders Gantu to imprison them before quickly discarding him, recognizing Leroy's greater efficiency. After a turn of loyalties, Gantu helps Lilo and Stitch escape, and they return to Earth aboard the Galactic Alliance vehicle.
Leroy and Hämsterviel gather the experiments at Aloha Stadium and prepare to kill them with the BRB-9000's cannon. The heroes arrive to stop the attack and destroy the cannon, but Hämsterviel unleashes the Leroys, who overwhelm the other experiments. Jumba recalls that he programmed a secret shutdown command into Leroy that can be activated when he hears Elvis Presley’s rendition of Aloha ʻOe. The team interrupts the battle to trigger the song, and the Leroys' command is activated, turning the tide.
With the victory secured, the group is once again honored by the alliance for their bravery. Stitch, Jumba, and Pleakley ask to return to Earth with Lilo, and the Grand Councilwoman grants the request, reinstating Gantu as the captain of the Armada with Reuben serving as a galley officer. Back on Earth, Lilo prepares for one final 'ohana' photo with her family and Mertle Edmonds.
In the closing moments, Hämsterviel is last seen reincarcerated with the Leroys in cells surrounding him. During the credits, a nearly-complete list of Jumba's experiments is shown, hinting at the endless possibilities for future adventures.
