The film explores issues of prejudice between the different species and the hardships they endure in their journey as they are guided by the spirit of Littlefoot's mother and also forced to deal with the murderous Tyrannosaurus that killed Littlefoot's mother. Littlefoot, alone, follows a cloud resembling his mother to the Great Valley, there to be joined by the others. Upon arrival, Petrie impresses his family with his newfound flight, while Ducky introduces Spike to her family, who adopt him. Cera reunites with her father and Littlefoot rejoins his grandparents.

The story has Sid being taken by a female Tyrannosaurus after stealing her eggs, leading the rest of the protagonists to rescue him in a tropical lost world inhabited by dinosaurs beneath the ice. Although Sid tries his best to raise the three dinosaurs, their rambunctious behavior scares away all the other animals' young and ruins a playground Manny built for Ellie's baby, and well as the ice mobile Manny made. A female Tyrannosaurus, Momma, whose eggs Sid stole, soon returns and carries both Sid and her young underground, with Diego in pursuit. Manny, Ellie, Crash, and Eddie follow as well and discover that the icy cavern leads to a vast jungle populated by dinosaurs thought to be extinct.