A decade after the events of the first film, Doctor Arthur Neuman is giving a tour of the hall of Norse mythology in Edge City's local museum. Neuman mentions that Loki, the God of Mischief, created the mask and unleashed it on Earth in order to spread his chaos among mankind, and that those who wear the mask are granted his powers. When Neuman brings up Loki's punishment and imprisonment at Odin's hands, a stranger suddenly becomes furious and transforms, revealing himself to be Loki. The tourists panic and flee, but Neuman stays to argue with Loki, who takes the mask in the display case, only to realize it is a replica. In anger, he removes Neuman's face from his body and puts it in the case, before disposing of the arriving authorities and storming out of the museum in a rage.Meanwhile, the real mask makes its way to Fringe City and is found in a river by a dog named Otis - who belongs to Tim Avery, an aspiring animator at an animation studio, who is reluctant to accept parenthood with his wife, Tonya. On a tropical island, Loki is relaxing until Odin confronts and orders him to resume the search for the mask he had sent him on, as he believes it has caused too much chaos for mankind. Loki asks his father to help him, only for the latter to sternly say that he has to take responsibility for his actions. Later that night, Tim puts on the mask for a Halloween party held at the studio, becoming an eccentric, green-faced party animal. When the party turns out to be a bore, Tim uses his newfound powers to perform a remix of "Can't Take My Eyes Off You", making the party a success and giving Tim's boss, Daniel Moss, the inspiration for a new cartoon, resulting in his promotion the next day.Tim returns to his house that night and, while still wearing the mask, conceives a baby. The baby, Alvey, is born with the same powers as the mask, which alerts Odin. Possessing a store clerk, Odin informs Loki about this and tells him that if he finds the child, he will find the mask. Months later, Tonya goes on a business trip, leaving Tim with their son. Tim, now promoted, desperately tries to work on his cartoon at home, but is continuously disrupted by Alvey. In order to get some peace and quiet, Tim lets Alvey watch various cartoons on television. Alvey, whose intelligence is amplified by the mask, devilishly comes up with the idea to torment his father using his powers. Meanwhile, Otis, who has been feeling neglected by Tim because of Alvey, dons the mask by accident and becomes a wild version of himself, who tries to get rid of Alvey, but all of his attempts are foiled by the much craftier infant.Eventually, Loki, after searching from home to home for the baby and leaving a trail of mayhem in his wake, finds Alvey and confronts Tim for the mask back, but Alvey uses his powers to protect his father. Odin, possessing Tim's body, becomes fed up with Loki's destructive approach for defying him once again and strips his son of his powers. Tim is later fired after failing to impress Moss during a pitch, but is able to reconcile and bond with Alvey. Loki, still determined to please his father, sneaks into the Avery household that night and 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 in exchange for the mask. When Tonya returns home, she goes with Tim and Otis, whom Tim had apologized to for his negligence towards him and convinced him that Alvey could be his new best friend, to make the exchange with Loki, but Loki decides to keep Alvey despite the exchange, forcing the group to chase after them as Tim becomes the Mask once more. The subsequent confrontation is relatively evenly matched due to both of them possessing equal powers, prompting Loki to halt the fight, and suggest that they should let Alvey decide who he wants to be with. Although Loki tries to lure Alvey to him with promises of fun, Tim takes the mask off and convinces his son to choose him using the connection he had forged with him.Saddened and enraged, Loki tries to kill Tim, but his time runs out and Odin appears in person, once again scolding Loki for his failure. Tim, however, feels sympathy for Loki and reminds Odin that regardless of their problems, they will still be family and nothing is more important than that. Touched by Tim's speech as the mask is returned, Odin reconciles with Loki and the duo return home. Some time later, Tim is rehired when his subsequent cartoon, based on his own experiences of Alvey and Otis competing for his attention, becomes a success. After the Avery family watches the cartoon's premiere, Tonya reveals that she is pregnant again.