The Incredibles and Frozone battle the Underminer. They prevent him destroying City Hall but are unable to stop him robbing a bank and escaping. The collateral damage outrages the government and prompts the shut down of the Superhero Relocation Program, denying the Parrs and other superheroes financial assistance. Violet's love interest Tony Rydinger discovers her superhero identity, causing agent Rick Dicker to erase his memory of her. Wealthy businessman Winston Deavor and his sister Evelyn propose secret missions for superheroes which will be recorded and publicized to regain public trust.

Winston chooses the less accident prone Elastigirl over Mr. Incredible for the initial missions. Bob struggles in his new role as a stay-at-home parent: trying to help Dash with math homework, Violet's heartache over Tony standing her up for their first date (being unaware of his memory wipe), and Jack-Jack wreaks havoc with his burgeoning superpowers. Edna Mode develops a suit to help control Jack-Jack's abilities. Meanwhile, Elastigirl encounters supervillain "the Screenslaver", who projects hypnotic images via TV screens. After preventing him destroying a crowded commuter train train, and thwarting his attempt to assassinate a diplomat, she tracks him to an apartment building and unmasks him as a pizza deliveryman who claims to have no recollection of his actions.

At a party celebrating the Screenslaver's arrest, Winston announces a summit of world leaders to legalize superheroes, hosted aboard his luxury yacht, the Everjust. Elastigirl realizes that the arrested pizza deliveryman is not Screenslaver but was being controlled by hypnotic goggles. Evelyn forces the goggles onto Elastigirl, revealing herself to be the Screenslaver. Evelyn explains her grudge against superheroes since Gazerbeam and Fironic failed to prevent her father's murder. She plans to sabotage her brother's summit by causing a catastrophe to tarnish the reputation of superheroes, ensuring they remain outlawed forever. She lures Bob into a trap and sends another group of hypnotized superheroes to subdue the Parr children. Frozone tries to protect them but is overwhelmed.

Violet, Dash, and Jack-Jack escape in the Incredi-bile, the car once owned by their father, and reach Winston's yacht. On board, the hypnotized Mr. Incredible, Elastigirl, and Frozone recite a vindictive manifesto on air designed to paint superheroes as a threat. They subdue the ship's crew, aim the hydrofoil at Municiberg, and destroy the controls. Jack-Jack removes Elastigirl's goggles, who in turn frees Mr. Incredible and Frozone. The Incredibles and Frozone release the other mind-controlled superheroes then all work together to turn the Everjust from crashing into the city. Evelyn, attempting to escape in a jet, is apprehended by Elastigirl and arrested. Superheroes regain legal status around the world.

Later, Tony accompanies Violet to a movie with the family. When the Parrs spot gunmen being pursued by police Violet leaves Tony at the theater, promising to be back in time, and the Incredibles give chase in a remodeled Incredi-bile.