The film opens in the past, where Zuba ), the leader of a lion pride, teaches his infant son, Alakay (Alex) how to protect himself. Alakay is trapped by poachers, and Zuba chases the hunters, but loses track of his son. Alakay's crate falls into a river which carries it to the sea. His crate drifts to New York City where he is put on display in the Central Park Zoo.
The movie cuts to the present, picking up where Madagascar left off. Alex, Marty, Melman, and Gloria are boarding an airplane that will be catapulted with a gigantic slingshot. King Julien and Maurice go with them. Midway through the trip, the penguins discover they are out of fuel, but manage a gentle crash landing in an African wildlife reserve. They all disperse and meet their species, while the penguins stay at the crash site and repair the plane.
Alex reunites with his father Zuba, and mother Florrie . Zuba's rival Makunga intends to use Alex so he can steal the throne for himself. Alex is tricked by Makunga into choosing an exceedingly large and muscular lion as an opponent in his right-of-passage trial for membership in the pride. Alex mistakes the test for a dance-off, and is easily defeated. Makunga assumes the throne when Zuba, despite his disappointment with Alex, refuses to banish his son, and is himself banished along with Florrie.
Meanwhile, Marty joins a herd of zebras, but discovers that each of the zebras is exactly like him, which makes him question how unique he is. Gloria gossips with other female hippos, and meets Moto Moto as a potential mate. Melman becomes a giraffe herd's new witch doctor and helps animals with diseases and wounds. His new friends convince him he has "Witch Doctor's Disease" and has only two more days to live. Julian develops a following, particularly from the flamingos.
Alex and Melman talk over their problems with a zebra they think is Marty. Marty arrives and takes offense that Alex cannot tell him from one of his "clones". Gloria tries to warm up to Moto Moto in a secluded pool, but realizes that he is only attracted to her "plumpness". Melman makes the best of his last hours by facing Moto Moto and telling him to take care of Gloria for all the great qualities he himself sees in her, which moves Gloria.
When the waterhole dries up, all the animals panic. Alex sets out to find the location where the water is clogged, and makes up with Marty, who goes with him. They trace it to a dam that New York vacationers had built to support themselves off the reserve after getting lost in the jungle, led by Nana the Old Lady. Alex is caught by the humans, but Zuba rushes in in the nick of time. Alex "intimidates" the humans by performing as he had done in the zoo, and the humans recognize him as the same one from the zoo. Zuba realizes the importance of Alex's gift and joins in with him.
Meanwhile, Julian proposes the animals make a sacrifice to a volcano to bring the water back, and Melman volunteers. Just before he jumps into the volcano, Gloria runs in and asks Melman about his confessions. Marty then arrives, and reports that Alex has been captured by the humans. Gloria and Melman head off the reserve with the Penguins using the repaired airplane. Despite Nana's efforts to defend the dam, the penguins destroy it, and the water is brought back to the waterhole. Simultaneously, Mort arrives at the volcano, pursued by a shark. The shark inadvertently sacrifices himself, falling into the volcano just as the now undammed river restores he water hole. Julian is impressed at how fast the gods respond.
Makunga is removed from the throne, being chased away by Nana after Alex tricks him into taking her handbag. Zuba offers to give Alex the throne, and he accepts. The giraffes discover that their previous witch doctor was only missing (now he returned), and that Melman will not die. Gloria realizes she loves Melman. All four friends decide to stay in Africa with Alex's family, as do Julian and Maurice, while the penguins take off in the plane for Skipper's honeymoon (Skipper married a bobblehead doll found on the plane). The lions and their friends dance off into the sunset.
