Several years have passed since the events of the first film, and the officers from the Spurbury Police Department find themselves out of work after a fateful ride-along that resulted in the death of Fred Savage. Farva (Kevin Heffernan), the boisterous and obnoxious former patrolman, has transitioned into a construction supervisor role, while Mac (Steve Lemme) and Rabbit (Erik Stolhanske) now work under him. On the other hand, Thorny (Jay Chandrasekhar), a seasoned officer, has taken up a job in logging, and Foster (Paul Soter), the most composed member of the team, is living with his girlfriend, the former Spurbury Police Chief Ursula Hanson (Marisa Coughlan).
One day, Mac receives a call from their former commander, Captain O'Hagen (Brian Cox), summoning the group for a fishing trip in Canada. However, upon arrival, they discover that the true purpose of this gathering is to meet Governor Jessman (Lynda Carter). During this meeting, she reveals that a recent land survey indicated territory originally designated for the U.S. is now up for grabs, and Canada is willing to hand it over. To facilitate the transition, Gov. Jessman invites the team to rejoin the police force, promising them permanent positions if they succeed in establishing a new police department.
At a reception filled with lively interactions, they encounter the town’s mayor, Guy Le Franc (Rob Lowe), a former hockey player, and Genevieve Aubois (Emmanuelle Chriqui), a cultural attaché who turns out to be an undercover officer. The locals are not welcoming, preferring to maintain their Canadian identity. The following day, as part of their re-integration, Foster and Mac accompany Canadian Mounties on a patrol, only to find themselves in an uproar in Le Franc's strip club.
Meanwhile, Thorny and Rabbit are assigned the laborious task of converting metric road signs to American equivalents. Sergeant Christophe Bellefuille (Tyler Labine), Sergeant Major Roger Archambault (Will Sasso), and Staff Sergeant Major Henri Podien (Hayes MacArthur) are among the Canadian Mounties they interact with. Things escalate when Thorny and Rabbit discover children under the influence of drugs, leading them to an abandoned lake house full of counterfeit items.
In a twist of fate, the Canadian Mounties attempt a prank by releasing a bear into the Vermont State Troopers' station, prompting a retaliatory kidnapping. As chaos ensues, the officers don Mountie uniforms and set out to undermine their Canadian rivals. However, Le Franc quickly warns them that impersonating an officer is a serious offense that could jeopardize their chances at keeping the territory.
As they unravel the truth about a drug operation linked to a smuggling ring, they realize that valuable items have been strategically placed by unknown parties on the verge of the U.S. turnover. Meanwhile, Genevieve and Rabbit develop a romantic connection, only for her true agenda to be revealed amidst the chaos. Using their skills, the Vermont State Troopers, alongside the Mounties, engage in a climactic confrontation against Le Franc and his crew, ultimately saving Rabbit and Genevieve, who reveals her undercover identity as Andrea Spooner, working for the Ontario Provincial Police.
As the Governor congratulates everyone for handling the situation, the tensions bubble to the surface once more, reigniting the ongoing rivalry between the Canadian Mounties and their American counterparts, culminating in a comical brawl post-press conference.
In a humorous mid-credits scene, footage from the tragic ride-along with Fred Savage is displayed, humorously detailing his catastrophic attempt to rescue a cat. In the wacky post-credits scene, Farva’s misfortune continues as he consumes a smoothie made with his own pinky toe, the result of a lost bet with Rabbit during the film's antics.
