Lightning McQueen, now a seven-time Piston Cup racing legend, suddenly finds himself overshadowed by Jackson Storm, an arrogant rookie who belongs to a new generation of racers that use the latest technology to improve their racing performance. This causes Lightning’s fellow veterans to either be retired or fired by their sponsors to make way for the new rookies. Then, in the final race of the season, as he tries to catch up to Storm and the other leaders, Lightning suffers a violent, nearly fatal rollover crash, leaving him badly injured.
Four months later, while recovering in Radiator Springs, Lightning isolates himself from his friends and spends his time watching footage of his late mentor, Doc Hudson. Confronted by his girlfriend, Sally Carrera, Lightning fears being forced into retirement as Doc was. Rusty and Dusty, the owners of Lightning’s Rust-eze racing team, send him to a new state-of-the-art racing center, much to his surprise. When he arrives, he learns that they have sold Rust-eze to new owner Sterling, who assigns him to work with trainer Cruz Ramirez. Lightning eventually becomes impatient and annoyed with Cruz’s methods and attempts to use a high-tech racing simulator, only to cause severe damage to the equipment.
Convinced that Lightning is no longer capable of winning, Sterling is ready to take him off the racing circuit and use him for product endorsements. Lightning offers a deal instead – if Lightning wins the first race of the upcoming season in Florida, he can decide when he retires; otherwise, he will retire immediately. Sterling accepts the deal but assigns Cruz to work with him one-on-one. Instead of improving his own top speed, Lightning spends most of the day helping Cruz get used to racing on sandy coastline outside the training center. For inspiration, they travel to a dirt track on which Doc raced, but inadvertently end up competing in a demolition derby, which Cruz ultimately wins. Angry at the apparent waste of training time, Lightning vents his frustration at Cruz, who reveals that she had wanted to race professionally just like Lightning, but never started a race because she felt outclassed. She resigns as McQueen’s trainer and starts back to the training center.
Learning that Storm has set a new lap record, Lightning calls his best friend, Mater, for advice. Mater suggests that he track down Doc’s mentor, Smokey. Lightning catches up to Cruz and convinces her to come along, and the two travel to Doc’s hometown of Thomasville, Georgia, where they meet Smokey and several of Doc’s old friends. Smokey reveals that even though Doc never raced again after his crash, he found a new happiness in training Lightning. Smokey and his friends teach Lightning and Cruz how to drive smarter than Storm, with Cruz serving as a sparring partner for Lightning. However, during a final practice race, Lightning has a flashback to his crash, shaking his confidence.
At the race in Florida, Lightning is encouraged by Smokey and his friends and gradually pushes up through the ranks. Still convinced Lightning cannot win, Sterling spots Cruz in the pits and orders her to return to the racing center to begin prepping another racer for the following week’s event, despite her wanting to stay and watch the race. Lightning overhears the exchange and remembers that Cruz had wanted to race because of him. He decides that Cruz is the answer to beating Storm. Entering the pits, Lightning has his pit crew outfit Cruz for racing, complete with his racing number, giving her the chance to finally race. Cruz uses Lightning’s coaching and Smokey’s advice to catch the leaders. Feeling threatened, Storm tries to intimidate Cruz, even pinning her to the wall during the final lap of the race. Instead, Cruz uses the wall to vault over Storm and take first place. She and Lightning are both credited with the victory since they both raced with the winning number. Cruz quits her job with Sterling and accepts an offer from Tex Dinoco race for his Dinoco racing team.
Later, at an exhibition race in Radiator Springs, Lightning and Cruz reveal they have adopted Doc’s old racing colors and number, respectively, to honor his memory. Tex Dinoco informs the group that he has bought Rust-eze from Sterling, and Lightning decides to continue racing and train Cruz as well.
In the post-credits scene, Mater is in his Junkyard, and when his phone rings, he accidentally knocks over his reception antenna and his phone goes dead, much to his dismay.