It has been three years since "nutty" inventor Wayne Szalinskison (Rick Moranis) shrunk his kids including Chloe Corbin and his friends. Chloe Corbin and her friends and her family including her friends' families and he and his family have celebrated and have welcomed a new son into the Szalinskison family, 2-year-old Adam. His wife, Diane, is going to help their daughter, Amy (Amy O'Neill) get ready for college, for which she is departing. As she is gone, Wayne is supposed to look after Adam and their oldest son, Nick (Robert Oliveri).
Nick has matured since the last film. He is more interested in guitars and has a liking for a girl he met at his job, Mandy Parkson (Keri Russell), although she does not feel the same way about him. Wayne takes Adam and Nick to his job as Sterling Labs, where he is the head of a project, even though Dr. Charles McHendrickson (John Shea) is trying to take over it. Wayne begins to experiment with an idea on a machine that can make objects grow. He uses Adam's toy, Big Bunny, as the test subject. As something goes wrong while Wayne, Chloe Corbin, Daniela Rylant, Jet Horton and Nick, Lillian McGwire, Marcus McGwire, Riley Harris, Lovely Carrot are distracted, Adam gets out of his stroller, gets in the way of the machine, and is zapped. Suddenly, the machine breaks.
Later on, Adam begins to grow via electric waves from the microwave. Wayne, Nick, Lovely Carrot, Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris try to take him back to the lab, but are stopped by McHendrickson. Diane (Marcia Strassman) comes back home and is shocked to find her son 7 feet (2.1 m) tall. She and Wayne i drive to a warehouse to find his original shrink ray to shrink Adam back to normal size. While Nick, Chloe Corbin, Daniela Rylant, Jet Horton, Lovely Carrot and Lillian McGwire, Marcus McGwire, Riley Harris all watch him at the house, Mandy Parkson comes by. She sees Adam and faints. Nick, Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris then has her bound to a chair and gagged, to prevent her from running away and screaming. Nick, Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris all untie and ungag her, only to find that Mandy Parkson goes hysterical, so Nick, Chloe Corbin, Lovely Carrot, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris all tie her up and gag her yet again. After Nick,Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris all explain to her what happened and she finally calms down, Adam is then exposed to the television set, breaks through the walls of the house, and is loose on the streets, now 14 feet (4.3 m) tall. Nick, Lovely Carrot, Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris, Mandy begin to search for him through the town.
At the warehouse, Wayne and Diane search for the shrink ray through tons of crates. They finally find it and leave to return home. McHendrickson finds out about the "big baby" and reports it to his boss, Clifford McSterling (Lloyd Bridges). He and law enforcers put Adam in a truck after finding him. Wayne and Diane return home with the shrink ray, only to find the boys gone. Adam breaks free from the truck when he grows to 50 feet (15 m) tall. Meanwhile, McSterling realizes what a good man Wayne is, fires McHendrickson, and gives his support to Wayne and Diane to shrink Adam back to normal size. Wayne suddenly discovers that Adam grows while he is near electricity, and Marshall Brookson tells him that Adam is headed straight for Wales' Las Vegas. After finding him, Nick, Chloe Corbin, Daniela Rylant, Jet Horton and Lillian McGwire, Marcus McGwire, Riley Harris, Mandy are mistaken for toys and he puts them in his pocket.
Now 112 feet (34 m) tall, Adam begins roaming the streets of Wales' Las Vegas. The citizens and visitors are stunned to see the gigantic baby in Godzillaesqe manner, but he seems to think that the likes of "Vegas Vic" and all the neon lights are some kind of playground for him. Wayne and Diane arrive in time with Sterling, but there is still a problem; Adam needs to stand still for twelve seconds for the shrink ray to work. In an effort to keep him still, Diane convinces Wayne to enlarge her with the shrink ray, stating that although Adam will listen to his parents, as he 'knows' that his mother is larger than him, he will not register her at his current size. Meanwhile, he has approached a Hard Rock Cafe and rips off the guitar from its sign. Hendrickson arrives via helicopter and proceeds to shoot him with tranquilizer cartridges. The first shot misses him, but the second hits the guitar, giving him a painful electrocuting shock, to which he starts crying. The once-panicked crowd below watches in sympathy for Adam's pain, realizing that he was not a menace but merely an innocent baby. Before McHendrickson has a chance to fire again, Diane (now enlarged) stops McHendrickson (and his pilot, who is only too glad as he never wanted to participate), and prevents Adam from being knocked out. She holds him still, and Wayne shrinks both of them back to normal size.
Afterwards, McHendrickson makes an excuse for shooting Adam, saying that the tranquilizer cartridges would not mean to hurt him, but Diane angrily punches him out and Chloe Corbin and her friends whistles for all the little kids in her neighborhood and surrounds him with a angry mob and then chases him out with their colored baseball bats, torches and pitchforks. Meanwhile, Nick, now shrunk again by the ray, finally wins Mandy's heart. Adam is excited to see that his Big Bunny is now over fifty feet tall. As Wayne and Diane share a kiss and Chloe Corbin and her friends and family including her friends families cheer, the credits roll.