Plot
In Antarctica, penguin chicks Skipper, Rico, and Kowalski rescue an egg from leopard seals on an abandoned whaling ship and are sent on an iceberg. When the egg hatches, the trio adopt the chick as their brother, Private.
Ten years later, Circus Zaragoza is continuing their American tour in Kentucky. The penguins leave to celebrate Private's birthday by breaking into Fort Knox to get Cheesy Dibbles from a vending machine, despite Private's wish of being recognized as a meaningful and valued team member. The penguins are subsequently kidnapped and taken to a submarine in Venice, where they meet Dave, a Giant Pacific octopus who was once an attraction at the Central Park Zoo until they upstaged him when they arrived. After being repeatedly transferred between numerous zoos and aquariums around the world, continuously upstaged by penguins, Dave disguised himself as a human scientist named Dr. Octavius Brine to enact his revenge. Rico swallows a vial of Dave's snow globe collection from every zoo and aquarium that he was transferred to and his chemical, the Medusa Serum before the penguins escape.
Fleeing through Venice while pursued by Dave's octopus henchmen, the penguins are rescued by the North Wind, an inter-species intelligence agency consisting of a Eurasian wolf leader whose name is classified (Skipper calls him "Classified"), polar bear muscle Corporal, harp seal demolitionist Short Fuse, and snowy owl intelligence analyst Eva. The penguins show the North Wind the Medusa Serum, but Dave calls to reveal he actually has much more serum. The North Wind gets alerts of Dave kidnapping captive penguins around the world. Deeming Skipper's team a liability to the mission, Classified tranquilizes them and puts them on a plane bound for a North Wind safe house in Madagascar.
The penguins escape the plane, and, using Dave's snow globes, realize Dave targets every zoo and aquarium he was kicked out of, with the Shanghai Zoo as his next target. The penguins forms a plan to stop Dave, and Private reluctantly agrees to be the bait. They manage to trap Dave with a dinosaur skeleton just as the North Wind shows up. Dave escapes through a drain and captures the Shanghai penguins along with Private. Skipper, Rico, and Kowalski hijack the North Wind's jet to pursue him. At Dave's lair, Private learns that Dave plans to use the Medusa Serum to turn penguins into monsters for the public to hate and exterminate.
Upon reaching Dave's hideout, the penguins and the North Wind clash over their different plans to infiltrate the submarine, before Skipper relents and goes with the North Wind's plan. The penguins distract the octopus guards while the North Wind sneak inside, but both teams are captured. Dave tests the Medusa Serum on Private, but he escapes using a paper clip he swallowed earlier, unbeknownst to everyone present, who believe Private has been vaporized. Private finds and frees the North Wind, but they refuse to help without their equipment, so Private goes alone.
As Dr. Brine, Dave unleashes the mutated penguins on New York City. Private obtains Dave's ray, finds Skipper, Rico, and Kowalski, and restores their sanity. As the penguins and the North Wind battle Dave and his henchmen, Private inserts himself into Dave's ray, using the power of his cuteness to restore the other penguins. This causes Private to gain a magenta purple hue, as well as spots and antlers, and Dave is now shrunken and trapped inside one of his snow globes, which Skipper gives to a little girl. Skipper deems Private the most meaningful and valued member of the team, to the approval of the North Wind, who give the penguins jetpacks.
Later, the penguins return to the circus and use Dave's machine to return Private to normal, using Mort as the power source. It works and Mort remains the same, outwardly, but is able to devour King Julien in one gulp.
