Right after Shrek and Princess Fiona's honeymoon, the newly wed couple goes to Princess Fiona's parents for dinner. When a Fairy Godmother discovers Fiona and Shrek are married she reminds the king about a deal they agreed on years ago, that Fiona should have married her son, who happens to be Prince Charming. The King then hires a cat named Puss-in-Boots, a sword fighting cat and ogre slayer, to kill Shrek.

As the result of a childhood wish, John Bennett's teddy bear, Ted, came to life and has been by John's side ever since. Their friendship is tested when Lori, John's girlfriend of four years, wants more from their relationship.

Oscar is a lowly tongue-scrubber at the local Whale Wash, who becomes an improbable hero when he tells a great white lie. To keep his secret, Oscar teams up with an outcast vegetarian Great White shark, Lenny, and the two become the most unlikely of friends. When his lie begins to unravel, it's up to Oscar's loyal friend Angie and Lenny to help him stand up to the most feared shark in the water and find his true place in the reef.

This comedy is set in Los Angeles days after the attack on Pearl Harbor, when the fear of a Japanese invasion hung over the city.