This second installment in the Problem Child franchise did not fare as well as its predecessor, Problem Child, only performing about half as well at the U.S. box-office. However, it has achieved a slightly higher score on Rotten Tomatoes, with the positive reviews praising it as better than the original Problem Child.
Ben Healy (John Ritter) and his son Junior Healy (Michael Oliver) move from Cold River, Illinois to Mortville, Oregon, a quiet, peaceful community, apparently as a way to start their lives all over again. Ben is initially sad to be leaving Cold River until Junior reminds him that everyone there has been horrible to him his whole life including his father, ex-wife and neighbors; Ben tells Junior he is right, they then leave while knocking over the welcome sign, then a montage is shown of them traveling cross-country. When they arrive at their new house, dozens of women line up in their front yard, wasting no time in wooing Ben. Apparently Mortville is also known as "the divorcee capital of the world", overwhelmingly full of women with few men, and in its centre is found a sphere-shaped rock-made monument called The Rock of Love. Aron Burger (Alan Blumenfeld) finally glad to have a man friend in the neighborhood, modestly invites them to his house for a barbecue. While there, Junior is introduced to Aron's twin daughters Dolly and Madison (Krystle and Tiffany Mataras). They demand him to each give them $10.00. He refuses and wants to go home. Aron then taunts him about how their hospitality is not good enough for him. In retaliation, Junior sets the gas pumps on Aron's grill up to high and when he goes over to light it, it ferociously explodes, causing him to land in a kiddie pool in the next yard, charring his eyebrows in the process.
The next day, Junior is reluctant to start his first day of school at Mortville Elementary. He is met by Trixie Young (Ivyann Schwan), who has known about him since the beginning of the movie (he shot her balloon with a slingshot on the way to their new house). Igor Peabody (Gilbert Gottfried) is now the school's principal and had also moved from Cold River to Mortville. But it is cut short when Junior enters his office, whereupon Peabody screams at the top of his lungs. Mortified by his return, Peabody decides to promote him from the 3rd to 6th grade so he will be gone in one year upon completing elementary school. When he enters his new classroom, he is met by the flustered teacher Mr. Thorn (James Tolkan) who is upset since he wonders how many kids he has to teach, since many of them were obviously held back constantly. Murph (Eric Edwards), the most held back student (as he has actually been in the 6th grade since 1970) and also the class bully, lazily sits by as everyone stares in fear at his inability to answer an easy math question, 3+2, to which Junior chimes in how easy that is, "5". Mr. Thorn is pleased with Junior's confidence, but Murph plans to pulverize Junior, but he outsmarts Murph by taping him onto the chalkboard, causing all the kids to run out of the school in fear.
Meanwhile, Ben is opening an account at the local bank and wishes to be self-employed. LaWanda Dumore (Laraine Newman), the rude, self-centred and wealthiest woman in Mortville who along with her meek assistant Smith (Paul Willson) notices Ben inside her bank from her upstairs office and becomes infatuated with him. She demands Smith to find out everything about him since she intends to make him her seventh husband. Later that afternoon, he picks up Junior from school, not knowing he was the only one there today, but he gets smashed over the head and knocked unconscious by a decorative satellite dish on the school's rooftop by Murph, still covered in pieces of tape residue. After regaining consciousness in the clinic, he notices the pretty school nurse Annie Young (Amy Yasbeck). Junior, disgusted, leaves the clinic and plans to draw all over the picture of Annie on the wall with a black marker. Trixie, however, shows up and verbally warns him not to do it, but he does it anyway and she flips him to the floor and draws a mustache on his upper lip.
Meanwhile, LaWanda looks over Ben's records in her office, but has serious doubts when she sees Junior's, and notices news headlines indicating all the trouble he caused. She decides to handle him in her own way so she can move over to Ben. Later that night, Junior is upset when he is forced to accept Rhoda (Kristen Simonds), a lazy, irresponsible babysitter, while Ben goes on a date with Debbie Claukinski (Charlene Tilton), who he and Junior met the day they moved in. After being insulted by Rhoda, Junior decides to call up Debbie's ex-husband Voytek (Zach Grenier) an uncouth slob who lives in a messy apartment, eats dog food, and is insanely jealous. He tells Junior that Debbie left him ruined emotionally and financially after their divorce, and is shocked to learn that she's out on a date with another man. Voytek confronts Ben and Debbie at The St. Pierre Club where they are enjoying themselves. He then smashes a lead pipe on Ben's head, and after a struggle, Ben thrusts the pipe into Voytek's abdomen, hurting his kidney. Debbie calls Ben and bully and punches him out. Back at the house, Rhoda's boyfriend shows up on his motorcycle, and the two go upstairs to the master bedroom to have sex. Junior sees the box that contains video equipment and smiles gleefully. As a weary and despondent Ben drives home, along with Debbie and Voytek in the passenger seat ferociously making out, he notices a line of cars and people sitting outside his house, cheering wildly. He looks and sees Rhoda and her boyfriend having sex via a projection screen embellishing the entire house's exterior.
Ben's father Big Ben Healy (Jack Warden) unexpectedly shows up, along with his pet dog Nippy. He says he is on vacation and wants to spend it with Ben, but he finds out that his father's so-called vacation is permanent since he has no money and his creditors are after him, which surprises Ben as he saw his dad on nonstop infomercials selling Big Ben franchises, which Big Ben admits flopped as he only got one franchisee (Voytek in a cameo). Ben decides to take his father in, since he owes him for a good home life and bribing the dean at his college to keep him in school. Big Ben ends up staying in Junior's room much to his disgust. The next day at school, Junior tails Trixie all over the school, wondering what she is up to. Armed with a slingshot, he turns around and she sprays him with the fire hose. The impact blasts him out the front doors. Shortly after, Ben shows up at the clinic where Junior is, draped with a towel. He nervously asks Annie if she would like to have dinner with him, but she refuses, saying that she cannot go out with anyone. Before he can figure out why, Junior drags him out of the clinic. Later that day, Junior notices Dolly and Madison selling lemonade for $2.00, but he only has a quarter. The girls decide to let him refill the pitcher, as a way for him to receive a free glass. He then goes over to a secluded place near his house and urinates into it. When he brings it back, they find out that he only filled it halfway and do not give him his free glass, not knowing he urinated in it. When Aron comes over to the stand after out working on their car (and still has no eyebrows after the grill incident), the girls fill him a glass and he drinks it. He declares it as tangy, but does not seem to mind.
That night, Junior tries to impress Ben by making dinner, but he tells him he has a date with Emily (Martha Quinn) another person they met the day they moved in. While Ben gets ready, Junior gets even by rigging their doorbell to electrocute her on their doorstep. When Ben opens the door, he is shocked to see Emily with shocked hairdo, blanched skin, and burnt teeth. Emily tells Ben she has the flu, and after Ben closes the door, Emily falls face first onto the ground. Big Ben thinks "the little monster" has been sabotaging his son's love life, and pressures Ben to punish Junior, to which Ben does. However, Ben later thinks that he has been too strong with Junior, and decides to spend more time with him, hopefully thinking he will be more well-behaved. The next day at school, Junior chases Trixie into the girl's bathroom. When he confronts her in a stall, she gets out an M-80, lights it up, and gives it to Junior who throws it into the toilet and flushes it. As they run out of the restroom, screaming, Mr. Thorn, in a hurry to go to the bathroom, bolts into the teacher's bathroom and sits down on a toilet. When the M-80 travels into the one on which he's sitting via the sewage line, it explodes. Luckily, he lands back onto the toilet and breathes a sigh of relief, thinking he is fine.
Later, Big Ben notices Dolly and Madison selling clothes. He finally notices a suit with a "Vote For Big Ben" election button inside it. Then he notices Nippy inside a cage on the table, and the girls then tell him that Junior sold all of his clothes for $10.00. Furious, Big Ben storms into Junior's room and decides to belt him. Junior, however, taunts him with toy nun-chucks. Big Ben charges towards him, but he jumps out of the way and Big Ben falls out the window. Laughing, Junior closes the window, just when Ben comes in and decides to take him out for a day of fun. He asks Junior if he has seen Grandpa (Big Ben) to which Junior replies, "Last time I seen him he was going out". As the car backs out of the driveway, it is seen that Big Ben landed in a tree, he yells to Ben to no avail. As they drive off, LaWanda and her moving crew show up and notice him up in the tree. Smith thinks he is Ben's father, LaWanda tells him to get him down, but he eventually falls to the ground.
At a carnival, Junior is disappointed that he is not tall enough to ride on the Crazy Dance, sort of a Tilt-A-Whirl kind of ride. After being taunted by Murph and Trixie, who managed to put stilts on her shoes to make her look taller, when going on the ride, Junior plans to make them pay. He goes underneath the ride and sets its speed to dangerously fast, causing everyone on board to vomit, and shortly after, the people who are watching outside. When driving home, Ben decides to make a deal with Junior that he will always be there for him, as long as he is being good. They then shake hands on it to seal the deal. When they arrive home, they find that the house has been redecorated. They find out that LaWanda was responsible for it, and has transformed Junior's space adventure-themed room into a circus motif, causing Junior to grouse how he "hates clowns". As she begins to leave, she promises Ben she will make dinner tomorrow night. The next day, Junior hypnotizes Nippy so he can scare LaWanda away, but cannot get him out of the trance. Finally having had it, he goes over to his Roach Motel keeper and notices his pet roaches, triggering another plan. At dinner, everyone notices something weird with their salads. Then the bowl of salad tips over and lands all over the table, causing all the cockroaches to land on LaWanda, Ben, and Big Ben. Fed up, an unwitting Ben indignantly reprimands Junior and coldly tells him that he has broken his dad's trust. Next, LaWanda comes in and verbally warns him not to mess with her anymore and tells him she will marry Ben, and then send him to boarding school in Baghdad. He tries to explain it to Ben the next night at his school's open house, but Ben dismisses it by telling Junior he has scuttled his own reputation. At the puppet show, Trixie secretly kidnaps the real puppeteers, ties them up, and performs the show in a very vulgar fashion. Thinking Junior was responsible, Ben runs up to the stage, yanks the puppets off Trixie's hands, and slams them onto the floor. Annie runs up to the stage and tells her why she did this. It turns out that Trixie is her daughter and she has the same problem with her which is similar to the problem Ben has with Junior. Disappointed and humiliated, she scoops her up and runs out of the building. Ben limps after her and telling her they can work it out, but she tells him that Trixie consumes her entire life and that she has no room for anything else, then runs off in the dark.
That night, Big Ben notices a still hypnotized Nippy in a shrub in the backyard. Finally relieved after finding him, he goes over, tips him over, and he falls to the ground. He picks him up and confusedly wonders what happened. Junior decides to start planning something decent, so he gets Ben to take him to a pizzeria where they end up having dinner with Annie and Trixie. Mr. Peabody, out on a date with his girlfriend, spots Junior and Trixie and starts mouthing off. The kids, who share a hatred for him, throw meatballs at him. Mr. Peabody yells at Ben for defending the kids' actions and throws an egg at him. He responds by starting a food fight. Junior and Trixie, who realize their parents like each other, become friends.
Junior, who strongly despises LaWanda, gets even by switching her blood sample with that of a rabid dog. While celebrating her engagement to Ben, she gets cake icing on her face, which bears a striking resemblance to foaming at the mouth (a symptom of rabies). As a result, she is handcuffed by animal control officers and sent to the hospital for observation. With her in the hospital, Junior overhears a patient in the room across from her saying he wants to hold the world record for the world's longest nose. Overhearing this, Junior sabotages the man's plastic surgery by switching the patient files, resulting in LaWanda receiving a gigantic nose - this is Junior attempting to make her so ugly Ben will not marry her. The same night, he escapes together with Trixie, and they both hope that Ben would marry Annie instead of Lawanda. Annie and Ben were looking for their kids, and are glad to see them sleeping together by the rock. Meanwhile, Big Ben is praying that he can be better father and grandfather to his family, but also that somehow LaWanda's money can end his debt collector woes.
The next day, Ben and LaWanda are about to get married. Junior tries to reveal the ugly Lawanda, but is shocked to see that LaWanda was able to make her nose small again after using her funds to undo the mess. However, just when LaWanda is about say "I do", Trixie uses a tractor over which she has carried the Rock of Love. She drops the rock on the altar, and when LaWanda tries to stop it just ordering vocally it to arrest, it crumbles over her. Ben finally realizes that Annie is the one for him. LaWanda says there is no one for her, until Big Ben proposes to her and she gladly accepts. Junior and Trixie set explosives onto the wedding cake, which splats on Big Ben and LaWanda just as they kiss. Annie, Ben and their kids finally leave the park, hoping to start a new and happy life.
Ex-Triumph guitarist Rik Emmett's hit Saved By Love plays over the end credits.