The film begins supposedly as a prequel to the first film, in a dark and shadowy forest, where a female wolf is being chased by other unseen wolves. She hides in a bush for a moment before jumping out, where it is implied she is later found and killed. The camera zooms in the bush, revealing what appears to be a pair of two glowing eyes.
The film cuts to the present day, where Winston (Larry Thomas) and Tony (Bill Lader) are at Alpha school, training the future leaders – including Stinky (Kate Higgins) and Claudette (Lindsay Torrance). While this is happening, Runt (Dee Dee Greene) appears and claims that he wants to hunt too, but Winston tells him he is supposed to be in Omega school. Just then, Kate (Higgins), Humphrey (Ben Diskin) and Lilly (Higgins) come and Kate tells Runt that Lilly plans to go on a field trip to Shadow Forest with the Omegas. Tony hesitates since he has been there before when things went bad, but Lilly assures them that everything is fine. Humphrey also agrees to go with them. Winston states that while the Alphas will be “kings of the fields”, the Omegas will be “kings of the forests”, and this makes Runt excited. As they enter Shadow Forest (which is supposedly haunted by a wolf ghost), a porcupine named Floyd (Blackie Rose) appears to tell them they must leave, but the wolves ignore him. They then come across the haunted Saw Tooth Cave – a cave that looks like a snake’s mouth with fangs. It mysteriously starts to get windy around the cave, and Lilly mistakes it for a wind storm. Humphrey hesitates and tells the others they must leave, but Runt climbs a tree to take a better look. Just then, the ghost appears right in front of him and two bolts of lighting shoot out of its eyes. This causes Runt to fall off the tree, frozen and terrified.
Later, Lilly, Humphrey and Runt return to the den and when Eve asks them why they were late, Humphrey states Runt had an “incident”, even though Runt insists he is fine. Kate claims that a different field trip would be better, but Humphrey assures her that the forest is not a bad place to explore. Meanwhile, Tony and Winston are asleep and Tony has a nightmare. Eve wakes them up with a false alarm, and Lilly tells them all about the field trip. However, when Runt mentions they came across Saw Tooth Cave, Tony decides to tell them a story of what happened to him when he was there. When he was younger, Tony would go on his first hunt with twins Lyle and Link (both voiced by Solomon Gartner) in the haunted forest, chasing a squirrel. When the squirrel hid in the cave, Tony told the twins to go in the cave and look for it. The twins do so, but turn back when the wind became stronger. This makes Tony to go in the cave himself, only to get chased away by the ghost. He then ends his story by stating that he never went back into the forest ever since. Kate, obviously freaked out by this, tells everyone that it’s getting late. Humphrey agrees and they return to their den. Kate and Humphrey start to get worried about the pups growing up as they go to sleep. As the soothing music starts to distort, the camera zooms in at Runt who is having a nightmare where he is at Saw Tooth Cave and sees the silhouette of a female wolf. He wakes up screaming from his dream – which also wakes up Stinky and Claudette – and says that he has to go back while convincing his siblings to come with him. They agree and the next day, the pups set off back to the haunted forest. There, they meet two female porcupines, Frieda and Fran (both voiced by Gina K. Bowes) who begin to make fun of them and forbidding them to pass. The pups pass anyway, but as they approach Saw Tooth Cave, they are attacked and chased away by the ghost. They narrowly escape it and Runt hides in a bush while Stinky and Claudette search for a way out of the forest. However, when Claudette returns without Stinky, they hear his scream and go looking for him. Runt climbs a tree and looks for his brother, unable to find him at first. Then, he looks at Saw Tooth Cave and sees the same wolf he saw in his dream, realizing the ghost is protecting her. The wolf points out where Stinky is – hanging on for dear life at the edge of a slippery cliff – and Runt and Claudette rescue him. Back at the den, Kate and Humphrey are upset about the pups lying to them, and Kate tells them to stay away from the forest. But the pups show that they are fed up with them being overprotective, and start to recall some of the events of the first film, where Kate and Humphrey also used to get into situations, and this makes them both smiles nervously. Meanwhile, Tony meets Lyle and Link again, who are not too fond of the Omegas and pups exploring the forest even though it is said to be off-limits. Tony tells them that it was against his wishes and that the forest is still dangerous, but the twins decide to venture in the forest anyway.
The pups set off again, only this time are followed by Kate and Humphrey. At first, Kate offers to go on a family walk, but Claudette tells them they are grown up and want to explore by themselves. The wolves hesitantly agree, and later Humphrey goes to visit Marcel and Paddy (Chris Smith), whom Humphrey asks them to keep an eye on the pups. They agree, while also telling Humphrey that he and Kate must learn to let them go, because it won’t be long until they’re all grown up. However, it doesn’t take long for the pups to realize they are being followed, so they split up. Paddy follows Stinky and Marcel follows Runt and Claudette. Runt sneaks off to the Saw Tooth Cave, deciding to speak with the wolf. He thanks her for helping him find Stinky the other day, but he asks to come up, she refuses with a scared voice. Runt goes in anyway and tries to cheer the wolf up, only for the ghost to appear behind him. When he mentions he has been to Rabbit Poo Mountain, the wolf pulls him in the cave. When Runt hesitantly asks for her name, she tells him to return the next day, so he leaves. At the same time, Lyle and Link are back in Shadow Forest and run into Freida and Fran, who scare them off but it leads them deeper into the woods. The twins approach the cave, only to be chased away again by the ghost. Back at Jasper, Lyle and Link tell the pack what happened, but no one believes them as they laugh it off.
That night, the twins decide to go back in order to chase out the ghost and if they do, they will be hailed as “heroes”. Runt hears this and they ask him if he had seen anything unusual in there, and Runt simply replies he has seen “something strange down by the river”. He returns to Saw Tooth Cave to warn the wolf that some members of his pack are after her. The wolf, whose name is Daria (Bowes), tells Runt her dark backstory and why she needs Runt to help her get back to her former pack at Rabbit Poo Mountain. Through a flashback, it is shown that Daria was born genetically blind and that the Head Wolf (Dennis Cox) saw her useless and decided to kill her. Her mother – the wolf seen at the beginning of the film – saves her at the last minute, thus breaking the law of the pack and sacrificing herself to protect her blind daughter. Daria was found by Floyd who had seen the whole thing, and decided to take her in and raise her. It is also revealed that the ghost itself is the spirit of Daria’s mother, protecting her from outsiders. As Lyle, Link come closer to the cave, Runt successfully manages to lead Daria and Floyd out, unseen. The other wolves enter the cave only to find it empty, until they are chased away by Freida and Fran.
Meanwhile, at the den Humphrey wakes up to see Runt is missing. He informs Kate about this and they both set off to search for him, while Runt helps Daria escape the forest. Kate and Humphrey run into Freida and Fran, and ask them about Runt, but they refuse to speak. Kate and Humphrey both promise to help Runt and Daria, and the two porcupines agree to tell them only if the two wolves beg, in which Humphrey does. Meanwhile, Runt, Daria and Floyd stop on a bridge to rest. While Runt goes to find twigs for Floyd, Daria hears a truck coming. Runt sees this and jumps in to save Daria at the last minute. Floyd is uninjured, due to the truck passing over him. The next day, Humphrey and Kate catch up with them and decide to help Runt and Daria. Sometimes later, they arrive at Rabbit Poo Mountain and see Daria’s former pack. Kate leads Daria to the only female members of the pack, but much to Daria’s dismay, her mother is not there. The Head Wolf recognizes Kate and when both girls start to leave, he follows them. Runt is alarmed by this and wants to do something, but Humphrey informs him not to do anything until Kate’s signal. Runt runs to stop Head Wolf from getting any closer, followed by Humphrey who tries to distract him. Another female wolf, Daria’s long-lost sister Lois (Jojo Blue), recognizes Daria and sadly tells her that their mother was killed and the pack’s rules were never changed. She also tells them that she might come and visit them, in which they both agree. Kate gives Humphrey the signal and they all leave. But once they reach Shadow Forest, they are caught up by Head Wolf and his assistants. Kate and Humphrey engage in a vicious fight with the other two wolves, while Head Wolf follows Runt and Daria back into the forest where she will be protected. As the intense climax builds, Daria narrowly escapes and the ghost attacks Head Wolf, killing him. Kate and Humphrey catch up and see this to their amazement, and Daria thanks Runt for helping her.
Meanwhile, Freida and Fran are seen giving Winston and Eve a tour around Shadow Forest. The others show up and Runt introduces Daria to them. Tony also appears and introduces the Saw Tooth Cave. Runt tells them that the ghost was only protecting Daria, and that they need to accept her or they will “continue to be haunted”. Winston agrees and welcomes Daria to the pack, and also declares Runt as the king of the forest. Now having gained full faith on the wolves, Daria’s mother’s spirit leaves Shadow Forest forever, causing the sun to shine over Saw Tooth Cave. Kate and Humphrey are proud of their son, and they have a heartwarming moment together. The film ends with them going back home with Daria as the newest member while the sun shines over Shadow Forest for the first time in years.