On a cross-country road trip to visit Bonnie's grandmother, Bonnie Emily Hahn has brought along a loyal crew of toys — Woody [Tom Hanks], Buzz Lightyear [Tim Allen], Jessie [Joan Cusack], Rex [Wallace Shawn], Mr. Pricklepants [Timothy Dalton], Mr. Potato Head [Don Rickles], and Trixie [Kristen Schaal] — to keep her company. While the car hums along, the toys pass the time watching a horror film on a portable DVD player, which adds a creeping chill to an otherwise ordinary trip. A flat tire forces Bonnie and her mother Lori Alan to pull over and spend the night at the Sleep Well roadside motel.
When the lights go out, the toys exit Bonnie's bag to explore the motel room, but Mr. Potato Head goes missing. Mr. Pricklepants begins to narrate the events as if they were a real horror movie, sure of his own expert status. The group searches the corridors of the motel, only to be snatched away one by one by an iguana named Mr. Jones Dee Bradley Baker, who seems to have a hand in the motel's more unsavory activities. The iguana’s latest theft brings Jessie against the odds; the iguana returns to take Combat Carl Carl Weathers, who has been separated from his owner, Billy, and then Jessie herself. The iguana is revealed to be under the control of the motel’s manager Ron Stephen Tobolowsky, who trains Mr. Jones to steal unattended toys to sell them in online auctions. In the end, Jessie is placed in a glass cabinet in Ron’s back room, joined with Combat Carl and other captured toys.
As morning nears, a buyer purchases Woody online and Ron packs him into a box. A delivery lady Dawnn Lewis takes Woody’s box out to her truck, shifting the fate of the morning. Combat Carl advises Jessie that their only chance is to reach the truck in a box, and though she trembles at the thought of entering one, Carl’s encouragement helps her find the courage. Inside the truck, Jessie frees herself and reunites with Woody. They return to Bonnie and her mother, who are preparing to check out after a tense night. Mr. Jones attacks Jessie, but Mr. Potato Head’s hand slides a curtain open, revealing the stolen toys to Bonnie and her mother, who vow to bring Ron to justice.
With the truth exposed, the police arrive to arrest Ron. In a desperate escape attempt, he tries to flee in the police cruiser, but careens into the motel sign and disappears into the morning light.
