Two years after the events of the first film, Stuart Little (played by Michael J. Fox) finds himself questioning his self-worth following a tough soccer match where he faced a harsh kick from his friend George (Jonathan Lipnicki). This feeling of inadequacy grows when an accident leads to George's toy airplane being destroyed due to Stuart's mishap. However, Stuart's father offers him encouragement, reminding him that for each Little, there exists a "silver lining," or a positive aspect that can emerge from an unfavorable situation.
While returning home from school, Stuart encounters a beautiful canary named Margalo (voiced by Melanie Griffith), who is being chased by a fierce peregrine falcon (voiced by James Woods). As they bond, little does Stuart know that Margalo has ulterior motives—she is secretly in cahoots with the falcon in a plot that involves stealing from unsuspecting homes. When the falcon pressures Margalo to bring back something valuable, she struggles with her feelings for Stuart, complicating her mission. Despite her initial intent, things take a dark turn when Margalo is coerced into taking Mrs. Little's (portrayed by Geena Davis) diamond ring.
When the Littles notice the ring has gone missing, they suspect it might have fallen down the sink. In a brave act, Stuart volunteers to retrieve it by being lowered down the drain. He nearly succeeds, but as the string snaps, Margalo comes to his rescue. However, this act of kindness only deepens Margalo's guilt, leading her to flee. Misunderstanding her departure as a kidnapping, Stuart embarks on a daring mission to save her, reluctantly accompanied by the family's cat, Snowbell (voiced by Nathan Lane).
To gather intelligence on Falcon’s whereabouts, they seek the help of Monty, a street-smart alley cat from the original film (voiced by Steve Zahn). Monty reveals that Falcon's lair is located in the abandoned observation deck of the strangely modified Pishkin Building. Stuart and Snowbell devise a clever plan, using balloons for Stuart to reach the top. Upon arrival, he discovers that Margalo is effectively the falcon’s captive, coerced into thievery. Stuart’s brave attempt to rescue her backfires as he is captured and dropped from a great height, but fortune favors him as he lands in a garbage truck.
Feeling despondent on a garbage scow, Stuart blames himself for the series of events. Just when despair seems overwhelming, he stumbles upon George's broken plane. After a bit of ingenuity, he manages to fix it, ready to swoop in to save Margalo, who has escaped from Falcon thanks to Snowbell's intervention. Their escapade takes a thrilling turn as the Little family, concerned for Stuart, follows him by taxi, witnessing an aerial adventure unfold over the park.
Stuart’s luck takes another twist when Falcon’s attempts to thwart him lead to a crash maneuver during a mid-air confrontation. As Falcon throws everything into his assault, Stuart refuses to run any longer, allowing Margalo to escape while he prepares for a daring counterattack. Using Mrs. Little's sparkling ring in a clever distraction, Stuart executes a kamikaze dive to take down Falcon. Although the falcon survives, he ends up being outwitted, crashing into the garbage, almost falling prey to Monty, who spots him as a possible meal.
At last, victory is sweet for Stuart, who celebrates triumphantly with his family and Margalo, who returns the stolen ring. As the evening wraps up, Margalo prepares to leave for her migration south, but not before bidding farewell to her friends. Stuart optimistically reminds her that their paths will cross again come spring, as his baby sister, Martha, speaks her first words: "Bye bye, birdie."
