A few weeks after the events of the first film, Farmer Arthur Hoggett is injured in an accident when he and Babe attempt to fix the farm’s well, leaving his wife Esme to tend their farm alone. Threatened with eviction at the end of the month unless their mortgage is paid, Esme takes Babe to a sheepdog herding contest in hopes of using its prize money to do so. At an airport in the city of Metropolis, an overzealous detection beagle named Snoop shows Babe what it is like to be rewarded for doing a good job by falsely signaling that he and Esme are carrying drugs, causing them to miss their connecting flight and forcing a few days wait for the next flight home.
At first unable to find a hotel that allows animals, Esme and Babe find accommodation at the Flealands Hotel, run by the sympathetic Miss Floom, who takes in stray animals. There, Babe is separated from Esme and meets a trio of chimpanzees – Bob, his pregnant wife Zootie and his younger brother Easy – and Thelonius, a civilized Bornean orangutan who is a servant for Floom’s elderly uncle, Fugly. Babe is made part of their clown act, which he is reluctant to appear in until the apes insinuate that he will be paid, believing it could be vital in saving the farm, but he soon inadvertently causes the act to end in disaster.
Meanwhile, Esme, believing Babe has escaped, goes looking for him but is arrested after an incident involving police officers and other bystanders when a motorcycle gang attempts to mug her.
The animals at the hotel soon become famished, and the chimps decide to obtain some sustenance by stealing from a local store, using Babe to distract a pair of guard dogs. Babe rescues one of the dogs when he falls into a canal and pledges to act as a bodyguard for Babe to express his gratitude. Ferdinand, Babe’s best friend, arrives at the hotel, and they are joined by other animal friends to rescue the captured animals and confront the animal control officers.
Esme returns to the hotel to find it in disarray and, after a series of events, the animals are reunited at a charity dinner. Floom sells the hotel and gives the proceeds to Esme so they can save the farm, where all the animals eventually go to stay. As the farm is saved and Hoggett finally fixes the water pump, he proudly smiles at Babe and says “That’ll do, Pig. That’ll do.”
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