Picking up several months after the events of the first film, Kenai, now a cave bear, is living happily with his foster brother Koda. Having just awoken from hibernation, the bears begin traveling to Crowberry Ridge for the first berries of the season. However, Kenai is haunted by memories of his childhood friend Nita, to whom he gave a special amulet many years ago. Eventually, Kenai and Koda meet up with Nita, who wants to burn her amulet so she can marry Atka. However, she has to do it with Kenai to send the bond back up to the spirits. At first, Kenai refuses, but finally agrees. Nita misses Kenai, but does not tell him. Instead, she asks if he misses being human, and if he ever thought of changing back. He replies that he has thought about it. Koda, who heard it all, races up a mountain and is finally found by Nita. However, the two are then caught in an avalanche. Kenai digs them out and tells Koda he will never leave him.
They make it to Hokani Falls, where they burn the amulet. Without it, Nita can no longer understand animals, so she says goodbye. Koda asks his mother in the Spirit-land to turn Kenai back into a human so he can be happy. Koda goes to the village to retrieve Nita, but Kenai is told by Rutt and Tuke that Koda cannot go to the village because the residents will kill him. When Kenai makes it there, he gets into a fight with Atka. He falls off a cliff into shallow water, where the spirits come. Koda tells Kenai that he asked the spirits to change him back into a human. Kenai tells Nita that he cannot change because he cannot leave Koda, but Nita tells him that she can. As a result, she turns into a bear that has same coloring as Kenai, and they get married. The film ends with Kenai and Nita getting married and Rutt and Tuke finding mates, with the spirits changing the cave painting of the young Nita and Kenai into two bear cubs, since neither are human any more.