Stitch (Chris Sanders) has settled into life with the Pelekai family, but a nightmare about reverting to his former programming and attacking Earth—even Lilo—haunts him. To ease his worry, Lilo (Dakota Fanning) reassures him that she knows he would never harm anyone, and she tests his goodness by having him carry out a few small, kind deeds. The pair then hop aboard a hovercraft to reach her hula class, where the everyday world of family, friendship, and gravity-defying dances begins to unfold.
At the class, Lilo’s teacher Moses outlines the upcoming local May Day festival, where each student must create an original dance. Lilo feels inspired when Moses shares a photo of her mother at a similar age, who won the festival in the past. After class, Mertle Edmonds taunts Lilo about living up to her mother’s legacy, and in a heated moment, Lilo retaliates physically. Moses doubts Lilo’s readiness for the competition, but Lilo insists she can improve and proves determined to earn her place through hard work and practice.
As they prepare, Lilo and Stitch struggle to generate ideas for their routine. One night, Stitch experiences seizures that disrupt his behavior, alarming Lilo. It’s later revealed that Dr. Jumba Jookiba (David Ogden Stiers) botched the charging process when Stitch was created, leaving him with a defective molecular structure. If Jumba cannot fix the charging device in time, Stitch could lose power and die. The malfunction strains their partnership: Lilo fears the condition will ruin their chances in the festival, while Stitch fears hurting her and himself more than once.
Meanwhile, Nani’s on-and-off boyfriend, David Kawena (Jason Scott Lee), and Pleakley try to keep healthy balance in their own lives, with Pleakley (Kevin McDonald) working to stabilize the relationship as best he can. The tension between caring for Stitch and pursuing the competition pressures Lilo, leading her to become tunnel-visioned about winning while overlooking Stitch’s distress.
The duo eventually crafts a hula inspired by the legend of Hiʻiaka, but Stitch’s condition continues to interfere with their practice. Jumba struggles to assemble a working charging machine, improvising with household items in a bid to save Stitch. On the day of the performance, Stitch offers Lilo good luck, but another seizure interrupts him and leaves a frightened Lilo worried about his safety. In a moment of panic, Stitch fears he is a danger to those he loves and runs away, convinced he is lethal.
Lilo chooses to forfeit the competition mid-performance and races to find Stitch, with Nani and David learning about the crisis from Jumba and Pleakley. As Stitch attempts to depart Earth in Jumba’s spaceship, the family and David plead with him to reconsider so he can be saved. A final seizure during takeoff sends the ship spiraling into the mountains. Lilo hovers over the crash site in a hovercraft and desperately tries to place Stitch into the newly finished charging machine, but it is too late—Stitch apologizes to Lilo, admitting his fear and apologizing for the pain he caused. Grief-stricken, Lilo apologizes in return for ever mistreating him and vows to love him always. In a miraculous turn, Stitch is revived through the power of their bond and Lilo’s unwavering belief in him.
That night, the family and David perform Lilo’s hula as Nani tells her sister that their mother would be proud. A star shines in the sky, seeming to affirm that memory, love, and family can endure even the darkest moments.
