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Synopsis
A decade after the events of the first film, Dr. Arthur Neuman is giving a tour of the hall of Norse mythology in Edge City Museum. When Dr. Neuman reaches the part concerning Loki's mask, a man in black becomes increasingly anxious. Dr. Neuman mentions that Loki created the mask and unleashed it on Earth, and that those who wear the mask would have the powers of Loki. When Dr. Neuman mentions that Loki was imprisoned by Odin, the stranger becomes very angry and transforms, revealing himself to be Loki. The tourists panic and flee, but Dr. Neuman stays to argue with the angry god. Loki takes the mask, but realizes it is a fake. In anger, he removes Dr. Neuman's still talking face from his body and puts it on the mask stand, before getting rid of the guards and storming out of the museum in a whirlwind of rage.
Meanwhile, the real mask, which was thrown in the river by Stanley Ipkiss and Tina Carlyle at the end of the previous film, makes its way to a town called Fringe City, not far from Edge City, and is found by a dog named Otis - who belongs to Tim Avery, an aspiring cartoonist at an animation company, is feeling reluctant to become a father. He has a beautiful wife, Tonya, and a best friend, Jorge. On a tropical island, Loki is relaxing until Odin confronts him and orders his son to find the mask. Loki asks Odin to help him, but Odin tells Loki that this is his mess and he has to clean it up. Later that night, Tim puts on the mask for a Halloween party, transforming into a party animal similar to the mask character from the first film. When the company party turns out to be a bore, Tim uses his mask powers to perform a remix of "Can't Take My Eyes Off You", making the party a success, and giving Tim's boss the idea for a new cartoon, resulting in his promotion the next day.
Tim returns to his house and, while still wearing the mask, conceives a baby. The baby, when he is born, has the same powers as Loki. Meanwhile, Loki is trying to find the child born from the mask, as his father Odin, possessing a store clerk, tells him if he finds the child, he will find the mask. Later, Tonya goes on a business trip, leaving Tim with the baby. Tim, who has been promoted at work, desperately tries to work on his cartoon at home, but is continuously disrupted by baby Alvey. In order to get some peace and quiet, Tim lets Alvey watch TV, which shows Michigan J. Frog, The Flintstones, Transformers: Armada and Woody Woodpecker. Alvey devilishly obtains the idea to mess with his father's head by using his mask powers. Meanwhile, Otis the dog, who has been feeling neglected by Tim because of Alvey, dons the mask by accident and becomes a crazed animal version of himself, who wishes to get rid of the baby, but all his attempts are overturned by Alvey. Tim starts to notice his son and dog's wild cartoonish behavior when Alvey starts harassing him.
Eventually, Loki finds the mask-born baby, and confronts Tim for the mask back, but is thwarted again and again by Alvey who uses his powers to protect his father. Eventually, Odin becomes fed up with Loki's destructive approach and strips his son of his powers. A seemingly-deranged Tim is later fired after failing to impress his boss during a pitch, but is able to reconcile and bond with Alvey. Loki, still determined to please his father, manages to complete a summoning ritual and appeal to Odin to restore his powers. Odin agrees, but only for a limited time, stating this as his last chance. Loki then kidnaps Alvey to exchange for the mask, but decides to keep him despite the exchange, forcing Tim to don the mask again to fight Loki. The subsequent confrontation is relatively evenly matched due to Loki and Tim-in-the-Mask possessing equal powers, prompting Loki to halt the fight, and suggest that they let Alvey decide who he wants to live with. Although Loki tries to lure Alvey to him with toys and promises of fun, Tim wins when he removes the mask and asks Alvey to come back to him using the human connection he has forged with his son.
Saddened and enraged, Loki tries to kill Tim, but his time has run out and Odin appears in person. Odin disowns Loki, calling him a failure. Tim, however, feels sorry for Loki and stands up for him. He reminds Odin that regardless of their problems, they are still father and son and that "the most important thing in life is a relationship with your family". Touched by Tim's heartfelt words, Odin embracing Loki as a son, accepting the mask from Tim as well. Tim's cartoon, based on his own experiences of a boy and a dog competing for the father's attention (with Jorge playing the father via motion capture performance), is a hit, and Tonya reveals that she is pregnant again before the film closes.
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