Four years after the events of the first film, Professor Sherman Klump has created a de-aging formula. He is in a relationship with DNA researcher Denise Gaines, developer of a method to isolate genetic material. Despite his good fortune, Sherman's id alter ego, Buddy Love, has taken to sporadically controlling Sherman's body. Sherman becomes determined to permanently rid himself of Buddy when his antics ruin a dinner in honor of his father Cletus' retirement; and a marriage proposal to Denise.

Despite his assistant, Jason, warning him of the harmful consequences, Sherman uses Denise's methodology to isolate and remove the DNA where Buddy has manifested. However, the Buddy genetic material grows into a sentient being when a hair from Jason's Basset Hound, Buster, accidentally lands in it. Sherman apologizes to Denise and they become engaged. Later, Dean Richmond informs them that Phleer Pharmaceuticals has offered Wellman College $150 million for the youth formula.

Sherman and Denise then encounter the physically reformed Buddy at a movie theater. Buddy pickpockets Sherman and learns of the $150 million offer. He subsequently visits the pharmaceutical company, making a rival bid of $149 million with Leanne Guilford, President of Acquisitions, for the youth formula. Sherman learns that the extraction has altered his body chemistry and that he is losing his intelligence. Realizing he needs to keep the youth formula out of Buddy's hands, Sherman stores it at his parents' home.

Cletus, sexually frustrated due to his age and impotence, accidentally drinks some of the youth formula. He goes to a nightclub and attempts to seduce his wife and Sherman's mother, Anna, but she is disgusted. Buddy witnesses Cletus changing and realizes that the youth formula is being stored in the Klump household. Meanwhile, Sherman's condition causes him to humiliate himself in front of Denise's parents, concerning her.

While Sherman's grandmother, Ida Mae Jensen and Anna are organizing a bachelorette party for Denise, Buddy (mistaken for a male stripper by Ida) steals some of the youth formula from the Klump household, filling the vial the rest of the way with fertilizer. This sabotage causes chaos at a demonstration the next day as Petey, the male hamster Sherman uses to demonstrate the formula, mutates into a giant monster who rapes Richmond as he is trying to escape under a fur coat, as Petey confuses him for Molly, the female hamster that escaped during the event. The traumatized and furious Richmond fires Sherman, who soon learns from Jason that his brain's deterioration has worsened, so he decides to break up with Denise. Cletus reconciles with Anna and consoles a depressed Sherman, and inadvertently gives him the solution to regaining his intelligence: getting Buddy Love back into his DNA.

Sherman quickly works on a new, more potent formula while his mental faculties allow him. Richmond confronts him about Buddy's actions, believing that they are working together. Sherman leaves with Richmond and a tennis ball covered in the youth formula and heads to a presentation at Phleer Pharmaceuticals that Buddy is giving about the youth formula. Meanwhile, a worried Denise discovers what has happened and that Sherman's brain damage is progressing. With Cletus' help, Denise goes after him. Sherman takes advantage of the canine DNA crossed with Buddy's and throws the tennis ball to distract him. Buddy catches the ball in his mouth, and the youth formula transforms him back into a toddler, then further into a glowing mass of sentient genetic material.............

Doesn't Really Matter

Carple