Erik, son of Mumble and Gloria, is unable to dance like the other penguins and feels out of place. He and his best friends, Bodicea "Bo" and Atticus, follow one of Mumble's friends, Ramón, leader of the Amigos, to Adélie-Land, which is now being ruled by a flying penguin con artist called the Mighty Sven. After surviving the loss of his native fishing grounds due to his "miraculous" ability to fly, he hired another of Mumble's friends, Lovelace (who was fired from his job as "Guru") to be his partner. They tell the others they were saved by humans but fled to Antarctica after believing they'd be eaten. There Sven performs his first miracles by revealing moss to the locals and using his power of "Sven Think" to help Ramón find a mate, where he instantly falls in love with Carmen, another Adélie, who is uninterested. Mumble, having followed the kids' footprints, orders them to come home. After encouragement from Sven, the children leave.
Meanwhile, Will, an adventurous and existentialist krill is determined to discover what lies beyond the swarm. His best friend, Bill, reluctantly follows to ensure his safety. Once separated from the swarm they realize that they're at the bottom of the food chain. Will attempts to "move up the food chain" by eating another creature while Bill believes he's going crazy.
Mumble tells Erik he's unique and that he'll someday find his calling, but Erik is still enthralled with Sven. While trying to cross a perilous ice bridge, an elephant seal, Bryan the Beach Master and his two sons, refuse to let the penguins pass. An argument results in Bryan getting trapped below ice. Mumble lures a leopard seal to chase him into the ice, freeing Bryan and earning his respect. Erik however attributed the successful rescue to his attempt at using "Sven Think", devastating Mumble.
When the penguins return to Emperor-Land, they discover a large iceberg has trapped the emperors in a deep pit surrounded by ice walls. While Mumble, Erik, and Atticus deliver their meager supply of fish to the stranded penguins, Bo goes back to Adélie-Land for more help. When Erik tries to deliver fish by flying like Sven, he nearly tosses himself over the iceberg. Mumble saves him and declares penguins can't fly, hinting that their friends and family are doomed. Erik begins to panic until Gloria sends Mumble away to fish and sings to calm her son down. During this, Bill decides to create another swarm after spying a family of jellyfish. But Will prefers to adhere to his new predator lifestyle.
The next morning, a large flock of skua attack the trapped Emperor penguins. Noah the Elder encourages them to fight the birds. When all seems lost, Bo returns with Adélie-Land, led by Sven. Sven orchestrates a cooperative effort to feed the trapped emperors through hunting and bringing back flows of fish from the sea. Meanwhile, Will, still trying to be a predator, attacks a fish that is scooped up and carried by Sven into Emperor-Land.
The humans who saved Sven and Lovelace come to Antarctica again to help the penguins, but a blizzard causes them to flee. Erik urges Sven to teach the penguins how to fly, but Sven reveals he isn't really a penguin, but a tufted puffin. Mumble, after watching snow fall into a crevice between chunks of iceberg, begins to tap-dance and lead the penguins in a dance, forcing snow between the ice to weaken it. The plan works until several chunks break loose, sending Bo, Atticus, and several penguins into the doomed crevice. Erik and Lovelace tumble towards the edge, and Mumble grabs the threads from Lovelace's vest. The threads snaps and causes Lovelace and Sven to tumble, but Erik is pulled to safety. Having injured his foot, Mumble can't lead the Adélies. Ramón realizes Carmen is trapped below and jumps down to be with her, finally winning her love. Sven proves himself to be a worthy dancer and despite public outcry he leads the remaining Adélies in dance while Erik and Mumble head to the elephant seal beach to seek Bryan, to help in collapsing the ice. Meanwhile, a newly reformed Will is reunited with Bill and their swarm. Bill reveals they are now legends after sharing their journey with the swarm.
Mumble and Erik arrive at Elephant Seal Beach where Bryan is in the middle of a dominance fight. Mumble pleads for help freeing the emperor penguins but Bryan refuses due to his duties as Beach Master. Using his singing abilities, Erik praises Mumble for his bravery and lectures Bryan for refusing to help after the penguins rescued him. Moved to tears, the elephant seals travel en-masse to Emperor-Land and begin slamming the ice to the beat of Queen's "Under Pressure", joined by Will, Bill, their krill swarm, Ramón, the Amigos, Carmen, Lovelace and the newly-reformed Sven. Finally, the iceberg crumbles, and the penguins are saved.