Larry Daley (Ben Stiller) is now head of Daley Devices, a company he founded to manufacture his inventions. These inventions, including the Glow-in-the-Dark Flashlight, were created from his experiences as a former night guard. He finds that the American Museum of Natural History is closed for upgrades and renovations, and the museum pieces are moving to the Federal Archives at the Smithsonian Institution in Washington DC. On the last night, Larry meets the museum pieces such as Teddy Roosevelt (Robin Williams), Rexy the Tyrannosaurus Skeleton, and Dexter the Monkey and finds out that several exhibits, including Teddy, Rexy, the Easter Island Head, and Ahkmenrah (Rami Malek) are not moving to The Smithsonian Institution - the other exhibits will no longer be animated. The next night, Larry gets a call from Jedediah (Owen Wilson), saying that Dexter stole the tablet, and that Kahmunrah (Hank Azaria), Ahkmenrah's older brother, is attacking them. Larry takes a plane to Washington and visits the National Air and Space Museum, the National Gallery of Art and the Smithsonian Castle to find the Federal Archives with the help of his son Nick (Jake Cherry).
Larry sneaks into the archives and locates the exhibits, frozen in the middle of a battle with Kahmunrah and his troops, who are trying to lock the exhibits in a crate. Larry got hold of the Tablet of Ahkmenrah, just when the sun sets and all the exhibits come alive again. Kahmunrah and his troops lock the crate and take the Tablet from Larry, and he tells Larry that bringing the exhibits to life is just only one of the tablet's powers - he intends to use it to raise an army from the underworld and conquer the world. Larry escapes with the help of General George Armstrong Custer (Bill Hader), who gets captured, and meets Amelia Earhart (Amy Adams), who is thrilled at the prospect of adventure and accompanies Larry. Meanwhile, Kahmunrah is able to recruit Al Capone (Jon Bernthal), Ivan The Terrible (Christopher Guest) and Napoleon Bonaparte (Alain Chabat) to help him capture Larry in return for sharing the world with him when he conquers it. Custer is locked up with the other exhibits from the American Museum of Natural History, and while he conceives a poor plan of attack (he will scream "Attack!" and the exhibits will jump out and attack), Jedidiah and Octavius (Steve Coogan) sneak out to help Larry.
Larry and Amelia are captured and taken to Kahmunrah. Kahmunrah then attempts to activate the tablet to open the gates of the underworld by pressing the symbols on the tablet, only to find out that the combination has been changed. He orders Larry to decipher the tablet's riddle and figure out the new combination before sunrise, and traps Jedidiah in an hourglass to hasten his attempts. Larry and Amelia consult a bust of Teddy who says that the answer is in the heart of the pharoah's tomb. The duo then consult The Thinker, but he gets distracted by a beautiful statue of a woman. They finally consult a group of Albert Einstein bobbleheads who tell them that the answer to the riddle (and hence the new combination) is pi. Larry and Amelia return to Kahmunrah, and Amelia goes for help while Larry delays Kahmunrah. Capone, Napoleon and Ivan arrive and tell him the code, and he opens the gates of the underworld and summons an army of bird-men.
Suddenly, the statue of Abraham Lincoln from the Lincoln Memorial bursts through the window, frightening the bird-men back to the underworld(But not before calling them "Half Pigeons"). Amelia then arrives, having freed the other exhibits, and Custer orders them to attack. After a battle, Larry duels Kahmunrah with his flashlight, defeating him and casting him into his own portal to the underworld. Amelia flies Larry and the other exhibits back to the American Museum of Natural History, where Teddy welcomes him back, and Larry assures him he has a way for them to remain there. Larry and Amelia say good bye and kiss, then Amelia flies away leaving Larry outside of the museum. Some time later, it is revealed that Larry sold his company and donated the money to the museum to pay for Audio-Animatronics exhibits - the exhibits that come at night are now accessible to the public alive, including Teddy as a tour guide, and Atilla as a storyteller since the museum now opens late. Larry is rehired at the museum as the night guard, and meets a young woman who looks just like Amelia. The film concludes as they talk and both walk off as Larry guides her towards the hall of miniatures with Jedidiah seen cheering as he rides a toy airplane. During the credits, a man from a black and white painting Larry visited is seen examining Larry's cell phone, which he left in a painting, and makes a new discovery (for his time period). His mother calls him, and it's revealed his name is Joey Motorola.