While raiding Berk’s Squab Farm, Mr. Fox triggers a fox trap caging himself along with his wife Felicity. Felicity reveals to her husband that she is pregnant and pleads with him to find a safer job if they escape, and he reluctantly agrees.
Two human years (12 fox years) later, the Foxes and their sullen son Ash are living in a hole in rural England. Mr. Fox, now a newspaper columnist, feels unhappy with his life and moves the family into a better home inside a tree, ignoring the warnings of his lawyer, Clive Badger, about how dangerous the area is for foxes due to its proximity to facilities run by three feared farmers: the fat Walter Boggis (a chicken farmer who eats three boiled chickens for breakfast, lunch, supper and dessert), the short Nathan Bunce (a duck and goose farmer who eats doughnuts stuffed with mashed goose livers), and the lean Franklin Bean (a turkey and apple farmer who drinks strong cider made from his own apples).
Soon after the Foxes move in, Felicity’s nephew, Kristofferson Silverfox, comes to live with them. Ash finds this situation intolerable; his soft-spoken cousin is superior to him at almost everything, and everyone – including his classmate, Agnes, and his own father – is charmed by Kristofferson at Ash’s expense.
Longing for his days as a thief, Mr. Fox and his friend Kylie, an opossum, steal produce and poultry from all three farms for three straight nights. Angered, the farmers decide to kill Mr. Fox. They camp out near his home, and when Mr. Fox emerges, they open fire but only manage to shoot off his tail.
After demolishing the site of the tree while attempting to dig Mr. Fox out, they discover the Foxes have dug an escape tunnel. As the Foxes will have to surface for food and water, the farmers wait at the tunnel mouth. Underground, Felicity is upset that Mr. Fox returned to his thieving ways.
The group later encounters Badger and many other local animal residents whose homes have also been destroyed by the farmers. As the animals begin fearing starvation, Mr. Fox leads them on a digging expedition to tunnel to the three farms, robbing them clean.
While the other animals feast, Ash and Kristofferson begin to reconcile after Kristofferson defends Ash from a bully. The cousins return to Bean’s farm, intending to reclaim the missing tail. When they are interrupted by the arrival of Bean’s wife, Ash escapes, but Kristofferson is captured.
Discovering that Mr. Fox has stolen their produce, the farmers and the fire chief flood the animals’ tunnel network with some of Bean’s cider, trapping the animals in the sewers.
Realizing that the farmers plan to use Kristofferson to lure him into an ambush, Mr. Fox heads to the surface to surrender, but returns when Rat, Bean’s security guard, confronts the animals and attacks Ash and Felicity.
A fight between Mr. Fox and Rat results in the latter being pushed into a generator, electrocuting him. Before dying, Rat reveals Kristofferson’s location. Mr. Fox asks the farmers for a meeting in town near the sewer hub where he would surrender in exchange for Kristofferson’s freedom.
The farmers prepare an ambush, but the animals, anticipating it, launch a counterattack that allows Mr. Fox, Ash, and Kylie to enter Bean’s farm undetected. Ash frees Kristofferson and braves enemy fire to release a rabid beagle to keep the farmers at bay, allowing the group to escape.
In the aftermath, the animals become accustomed to living in the sewers with others considering moving in, including Kristofferson’s recovering father. Ash and Kristofferson settle their differences and become good friends. One night, Mr. Fox leads his family, Kylie, and Agnes to a drain opening built into the floor of a supermarket owned by the farmers. Celebrating their new food source and the news that Felicity is pregnant again, the animals dance in joy.