Woody bersedia untuk ke khemah koboi bersama Andy malangnya tangannya dikoyakkan, forcing him to stay on the shelf. Di situ Woody sebuah permainan penguin toy bernama Wheezy, who is to be sold at a yard sale. Dengan bantuan anjing Andy, Buster, Woody sneaks out dan menyelamatkan Wheezy, tetapi dicuri oleh seorang pengumpul permainan enthusiastic. Buzz Lightyear and the other toys recognize the thief as Al McWhiggin, pemilik Al's Toy Barn (Gedung Permainan Al), and set out to rescue him.

In Al's apartment, Woody discovers he is a valuable collectable based on an old, popular TV show called Woody's Roundup, and is set to be sold to a muzium permainan di Tokyo, Japan. The other toys from the franchise—Jessie the yodeling cowgirl, kuda Woody Bullseye, dan Stinky Pete the Prospector, who is inmint condition dalam kotaknya yang belum dibuka—are excited about the trip, but Woody ingin pulang kerana beliau masih permainan Andy. They needed Woody to stay because if he wasn't with them, they would go back into storage. That night, Al accidentally rips off Woody's broken arm and Woody attempts to recover his arm and return to Andy. However, percubaannya disabotaj apabila televisyen dihidupkan, mengejutkan Al dan dan mengagalkan percubaan-percubaan berikut untuk pulang ke Andy. Woody suspects Jessie because the TV remote was near her dan merancang untuk pulang ke Andy setelah tangannya dibaiki. Walau bagaimana pun, beliau berubah fikirannya setelah mempelajari Jessie was outgrown oleh pemilik lamanya Emily and realizes Andy will outgrow him at some point.

Buzz and the other toys—Rex, Mr. Potato Head, Slinky Dog, and Hamm—reach the Al's Toy Barn store across from Al's apartment. However Buzz gets captured by a newer Buzz Lightyear action figure who is more deluded than the old Buzz was before. The new Buzz is mistaken by the other toys as Andy's Buzz and joins them to Al's apartment. The real Buzz escapes lalu mengejar mereka, accidentally releasing an action figure musuh utamanya Emperor Zurg, who, seperti watak Buzz baru, tidak sedar dia sebuah permainan.

Buzz rejoins the others as soon as they find Woody, but Woody refuses to return to Andy. Walau bagaimana pun, he changes his mind once he watched a boy with him on TV making him realize how much he missed Andy and Buzz mengingatkan beliau bahawa permainan bertujuan untuk dimainkan. Woody memujuk Jessie dan Bullseye untuk mengikutinya as another way to stop them going back into storage, tetapi Stinky Pete, out of his box, locks up the air vent the toys used to get to Al's apartment to separate Woody from Andy's toys. It is revealed that Stinky Pete was the one who sabotaged Woody's attempt in recovering his broken arm during the night to prevent him returning to Andy. Before they are taken by Al, Stinky Pete tells them bahawa dia ingin ke Japan kerana dia tidak pernah dijual. The two Buzzes and the rest of Andy's toys encounter Zurg in an elevator shaft (Who the new Buzz starts to fight) while chasing Al, but the new Buzz remains behind to play with Zurg once he discovers that Zurg adalah bapanya. When New Buzz is fighting Zurg they end up outside on a blade of grass where Heimlich and Flik from A Bug’s Life are seen.

Buzz and the others follow Al to the lapangan terbang and enter the baggage claim area to save Woody. Stinky Pete tries to stop them, ripping Woody's arm again, but he is defeated and stuffed in the bag of a girl who draws on the faces of her toys; this gives him a chance to see what it is like to be played with (what Woody calls "the true meaning of 'playtime'"). Jessie ends up being boarded on the airplane to Japan, but Woody, Buzz and Bullseye save her just sebelum kapal terbang berlepas and the toys return home to await Andy's arrival, Woody uses his pull string as a lasso. Later, Andy takes Jessie and Bullseye in as his new toys and fixes Woody's arm. The toys also learn that perniagaan dan mood Al telah merosot secara mendadak disebabkan kegagalan menjual geng Roundup ke Jepun. As the new toys become accustomed to having a new owner, Woody tells Buzz that he is not worried about Andy outgrowing him, because when he does, they will have each other for infinity and beyond.