Following immediately after the events of the first film, the Incredibles and Frozone battle the Underminer who has just appeared to terrorize Municiberg. Though they prevent the destruction of City Hall, they are unable to stop him from robbing a bank and escaping. The collateral damage caused by the incident outrages the government and prompts them to shut down the Superhero Relocation Program, leaving the Parrs and other former superheroes without financial assistance. Violet’s love interest Tony Rydinger also discovers her superhero identity, forcing agent Rick Dicker to erase his memory of her. Frozone informs Mr. Incredible and Elastigirl of an offer from Winston Deavor, a wealthy businessman. He and his sister Evelyn propose sending the heroes on secret missions which will be recorded and publicized to regain public trust in superheroes.
Due to Mr. Incredible’s tendency to accidentally cause collateral damage, Winston chooses Elastigirl for the initial missions. While Elastigirl is away, Bob struggles with his new role as a stay-at-home parent: Dash has trouble with math homework, Violet becomes withdrawn after Tony fails to show up for their first date due to his memory wipe, and Jack-Jack wreaks havoc with his burgeoning superpowers. He takes Jack-Jack to Edna Mode, who develops a suit that helps control his abilities. Meanwhile, on her missions, Elastigirl encounters a mysterious supervillain called the Screenslaver, who projects hypnotic images via TV screens. After preventing him from destroying a crowded runaway commuter train, and thwarting his attempt to assassinate a diplomat, she tracks him down to his hideout in an apartment building, and following a brief struggle, unmasks him as a pizza deliveryman who claims to have no recollection of his actions.
At a party celebrating the Screenslaver’s arrest, Winston announces a summit of world leaders to legalize superheroes, hosted aboard his luxury hydrofoil yacht, the Everjust. Unsettled by the ease with which she captured the Screenslaver, Elastigirl realizes that he was being controlled by a pair of mind-control goggles. Evelyn forces the goggles onto Elastigirl, revealing herself to be the mastermind behind the Screenslaver. Evelyn explains that she has hated superheroes since Gazerbeam and Fironic failed to save her father when he was murdered by burglars. The event led her to conclude that superheroes have taken independence from society, who in turn had become dangerously over-reliant on superheroes. She plans to sabotage her brother’s summit and cause a catastrophe that will tarnish the reputation of superheroes, ensuring they remain outlawed forever. Using Elastigirl, she lures Bob into a trap, then sends another group of hypnotized superheroes previously invited to the summit to subdue the Parr children. Frozone tries to protect them, but is overwhelmed and placed under Evelyn’s control.
Violet, Dash, and Jack-Jack escape with the help of the Incredi-bile, a high-tech car once owned by their father, and reach Winston’s hydrofoil yacht. On board, the hypnotized Mr. Incredible, Elastigirl, and Frozone recite a vindictive manifesto on air designed to paint superheroes as a threat. They subdue the ship’s crew, aim the hydrofoil at Municiberg, and destroy the controls. The Parr children reach them, and Jack-Jack removes Elastigirl’s goggles. She in turn frees Mr. Incredible and Frozone. The Incredibles and Frozone release the other mind-controlled superheroes by destroying their goggles, then work together to prevent the Everjust from crashing into the city by turning the ship. Evelyn attempts to escape in a jet, but is apprehended by Elastigirl and arrested. Due to their actions, superheroes around the world regain legal status.
Later, Tony accompanies Violet to a movie with the family. When the Parrs spot a high-speed pursuit of gunmen by the police, Violet leaves Tony at the theater, promising to be back in time, and the Incredibles give chase in a remodeled Incredi-bile.