The OSS now has a full child spy section, of which 13-year-old Carmen Cortez and 10-year-old Juni Cortez have become agents. They face particularly difficult competition with Gary and Gerti Giggles, the children of double-dealing agent Donnagon Giggles, whom Carmen and Juni helped to rescue in the previous film. It is shown that Carmen defends Gary, and has a crush on him, which strains her relationship with Juni.
After an incident at a local amusement park owned by Dinky Winks where the President’s daughter Alexandra deliberately sabotages a thrill ride which juggles its passenger, forcing the Giggles and the Cortez kids to compete in the rescue. Donnagon, who has somehow hacked into the teleprompter which the President was reading from, is named the director of the OSS. Juni is fired after being framed by Gary (who was actually to blame) for losing the “Transmooker,” a highly coveted device which can shut off all electronic devices. In his new position as director, Donnagon can carry on with his plan to steal the Transmooker, so he can rule the world.
Carmen manages to hack into the database, and reinstates Juni’s level as an agent. She and Juni use some hints from Alexander Minion, and follow the trail to a mysterious island near Madagascar, which is home to Romero, a lunatic scientist. Romero has been attempting to create genetically-miniaturized animals, so he can make a profit by selling the animals to kids in “miniature zoos.” He had an experiment go wrong after accidentally pouring growth concoction onto the mutated set of animals, as a result, he is unwilling to leave his lab, out of fear of being eaten. When Carmen is captured by a Spork, a breed of flying pigs, she meets Gerti, who reveals to her that Gary is actually evil. Carmen changes her feelings for Gary after he tries to kill Juni, and she sides with her brother. Meanwhile, Romero finds out that his creatures are much friendlier than he thought. After fighting pirate skeletons (that came alive after Juni stole a necklace from them), Carmen and Juni, along with the help of their family (who came to the island when they heard their kids were missing), Gerti, Romero and his creatures, destroy the Transmooker, and defeat Donnagon and Gary. Afterwards, Gregorio and Donnagon fight each other, as Gregorio put it, “the old-fashioned way.”