Within the Lego Universe, Batman continues to protect Gotham City and fight crime. During his latest mission to stop the Joker from destroying the city, he hurts his arch-rival’s feelings by telling him he is not as important in his life as he thinks he is, leading Joker to seek the ultimate revenge on him. The following day, Batman’s alter ego, Bruce Wayne, attends the city’s winter gala, which is celebrating both the retirement of Commissioner Gordon and the ascension of his daughter Barbara as the city’s new police commissioner, only to be infuriated by Barbara’s plans to restructure the police to function without the need of Batman. Without warning, Joker crashes the party with the city’s other villains, all of whom surrender, with the exception of Harley Quinn, who disappears during the confusion.
Suspecting his arch-rival is up to something, Batman plots to steal Superman’s Phantom Zone Projector, a device that can banish anyone to the Phantom Zone which houses some of the most dangerous villains in the Lego multiverse. Just as he plans his heist of the device, Alfred intervenes and advises him to take charge of Dick Grayson, whom Bruce unwittingly adopted as his ward during the gala. Reluctantly agreeing to do so, Batman fosters Dick as Robin, whereupon the pair successfully recover the Projector from the Fortress of Solitude, and break into Arkham Asylum to send Joker to the Phantom Zone. Suspecting his arch-rival wanted to be sent there, Barbara locks up Batman and Robin for their reckless actions.
While the Projector is being seized as evidence, Harley steals it back as part of Joker’s plan and frees him, allowing him to return to Gotham with all the villains he had recruited in the Phantom Zone. Realizing that the city does need him, Barbara releases Batman and Robin and teams up with them and Alfred to stop the Joker. Although Batman finds himself able to trust and rely on his new team upon reaching Wayne Island, he chooses to send them away rather than losing them like his parents. Upon facing him alone, Joker believes that Batman is incapable of change and zaps him to the Phantom Zone before stealing the Batcave’s stash of confiscated bombs. Arriving in the Phantom Zone, Batman witnesses the harm his selfishness has caused to everyone and slowly accepts his greatest fear. Making a deal with the Zone’s gatekeeper Phyllis, a talking Lego brick, to be allowed back to Gotham in order to retrieve the Zone’s escaped prisoners, Batman arrives in time to save his teammates, apologizing to them for his actions, and requesting their help to stop Joker.
Realizing that Joker plans to use the explosives he took to destroy the city’s Energy Facility, thus causing the city to come apart and be destroyed, Batman turns Barbara into Batgirl, before he, his team, and Gotham City’s other villains, who felt neglected by Joker, manage to successfully send the escaped villains back to the Phantom Zone. However, the group fail to stop Joker’s bombs going off as the explosion begins to tear the city apart at the plates beneath it. Knowing this was his fault, Batman reluctantly convinces Joker that he is the true reason for being the hero he is before they, their friends and allies, and the city’s inhabitants, chain-link themselves together and pull the plates back together, saving the city.
With the city saved, Batman prepares to be taken back into the Phantom Zone to fulfill his bargain only to be rejected by Phyllis who chooses to let him remain after seeing how much he had changed in order to save everyone. Batman allows Joker and the rest of his rogues gallery to temporarily escape with the confidence that whenever they return, they will be no match for his new alliance with Robin, Batgirl, and Alfred.