Once again in the Pridelands, all of the animals gather around Pride Rock to celebrate the birth of another new cub. This one is Simba and Nala's. After annointing the cub's head, Rafiki hold the newborn up for all to see.
Timon and Pumbaa talk after the ceremony about how they plan to teach "him" all the things they know. Rafiki then informs them the cub is a girl.
When Scar had died, a group of lionesses were still loyal to him. They were banished to The Outlands. Zira, Scar's former mate, is their leader. Zira wants Simba dead so she can put her son, Kovu, on the throne. Although not his real son, Kovu was hand chosen by Scar to take his place.
Kiara grows, and has to suffer through overprotective father and "uncles" (Timon and Pumbaa). Being Simba's daughter, she too has a mischevious streak. One day she wanders away from Timon and Pumbaa straight into The Outlands. There, she meets Kovu. She is wary of him at first, since she had been taught never to trust an Outlander. Eventually though, the two become friendly. Kiara and Kovu find themselves in the Pridelands. They are interupted, however, by Simba and Zira, who come to retrieve their cubs. Simba verbally attacks Zira for being in the Pridelands with Kovu. She informs him that he is only a cub and doesn't know any better. The parents and their respective cubs go their seperate ways.
Simba lectures Kiara about the need to keep herself safe, being the future queen. She states that she might not want to be queen. Simba lets her know they they are a part of each other: "We Are One".
Meanwhile Zira lectures Kovu on associating with Simba's daughter. She reminds him that is Simba's fault that Scar is dead (even though it is really the hyenas who killed Scar *s*). Kovu tells his mother that he only wanted to be friends with her. Zira then comes up with a plan: Kovu will use Kiara's friendship to get to Simba.
The years pass...
Kiara is now an adult lion ready to go on her first hunt. She tells her father not to interfere. She wants to do this on her own. Simba promises, but still sends Timon and Pumbaa to keep an eye on her.
Meanwhile, Kovu is now also grown up. Zira's plans of the past are set into motion. Kovu's brother and sister, Nuka and Vitani, set fire to the area around Kiara. Kovu then sets out to "save" her.
Kiara tries, unsuccessfully, to catch some food. Then she spots Timon and Pumbaa. Outraged that her father broke his promise, she runs off. Too late she realizes that she is trapped by the fire. She runs to get to safety, but passes out. Kovu picks her up and brings her to a safe spot. Kiara wakes up and sees the strange lion and is defensive. Then she realizes it's Kovu. She's happy to see her friend of the past. Simba comes on the scene and sees Kiara with Kovu, not realizing who he is. Kiara lets her father know of her displeasure at his breaking his promise. Kiara then tells him how Kovu saved her life. Simba, now realizing who the lion is starts to get mad, but is reminded by both Rafiki and Nala that Kovu saved Kiara. Kovu tells them that he was exiled from The Outlands. Simba reluctantly accepts Kovu back into his pride, under the condition that he must prove himself.
When the group gets back to Pride Rock, Kovu realizes that although he is allowed back, he will not be permitted to sleep with the other lions. He then tells Kiara that he can show her how to hunt correctly. She accepts the challenge and they agree to meet the next morning.
The next morning, Kovu sees Simba alone, and is about to take the chance to kill him. At that moment, Kiara comes up to him, and ruins his chance. The two lions go off together to hunt. While they are out, they meet up with Timon and Pumbaa, who are chasing birds. Kiara and Kovu join them. Kovu asks if this is hunting practice, but is informed that it's just for fun. The concept is a foreign one to Kovu, who was brought up without any fun. The two lions have funchasing the birds, until they are chased themselves by a herd of rhinos. They run, but are still seeming to have fun. Kiara, Kovu, Timon, and Pumbaa hide in the rocks to escape the rhinos.
Rafiki then comes upon the exhausted pair, and introduces them to "Upendi". The lions fall in love. When they return home, Simba sees the affection between the them.
The next morning, Kovu plans to tell Kiara the truth about Zira's plot, and see if she'll accept him as a mate anyway. He is delayed by Simba, who wants to have a talk with him.
While on their walk, Kovu and Simba are met upon by Zira and the other Outlanders. Zira thanks Kovu for "delivering" Simba to her. Kovu, who had already decided not to go along with the plan because of his love for Kiara, is made out to look guilty. The lionesses attack and Simba tries to get away. He attempts to climb the canyon, and Kovu is above him. Zira shouts for Kovu to kill Simba, but Kovu can't do it. Nuka, who has always been the unnoticed son, jumps in to do it himself, hoping to win his mother's love. He climbs up some logs, but the logs slip from underneath him. He falls, and is buried by the logs. Kovu rushes to help his brother, but is pushed aside by Zira. Nuka dies in his mother's arms.
Simba is seen by Kiara walking back to the Pridelands in great pain. She sends Zazu off to get help. Before passing out, Simba manages to relate to Kiara about Kovu and the ambush. Timon and Pumbaa arrive and help get Simba back to Pride Rock.
Zira mourns the loss of Nuka and asks Scar to look over him. She then turns on Kovu and swats him across the face, leaving a scar across his eye reminiscent of Scar's. She blames Kovu for Nuka's death and accuses him of betraying his pride. Kovu runs off.
Kiara can't believe that Kovu would betray her. When Kovu returns, the different animals see his scar. He tries to explain, but is cut off. Simba banishes him from the Pridelands. Kovu leaves, while Kiara weeps.
Kiara tries to appeal to her father and get him to reconsider, to no avail. She runs back to her den and escapes through a hole in the wall.
Away from Pride Rock, Kiara tries to find Kovu, but can't. She relates on how much she loves him, and that hopefully there's a way for them to be together. Kovu sees her and relates on his love for her. They go towards each other and nuzzle. The walk off together and come to a body of water. When they look down, their reflections are merged. Kovu says "Look...We Are One." This reminds Kiara of when she was a cub and her father's words. She realizes that she must go back. When Kovu suggests they run away together, she lets him know that they are the link between the Pridelanders and the Outlanders. The two lions head back to the Pridelands.
Meanwhile, Timon and Pumbaa are lamenting the fact that they lost Kiara again. Simba approaches them and comes to find out that Kiara is missing. They gather the lionesses to go search for her.
Simba's pride and the Outlanders move towards each other in battle. The fighting starts. Zira and Simba go towards each other and are about to fight when Kiara and Kovu rush into the middle. Kiara stops her father from fighting Zira by reminding him "We Are One". All of the lionesses are part of the circle of life. Zira tells Vitani to attack, but Vitani has second thoughs, and agrees with Kiara. Zira then proclaims that Vitani will die too then. This causes Zira's other lionesses to rethink their decisions and not fight either. Zira jumps at Simba, but Kiara catches her in the air. The two roll over and over, and tumble off the edge of the cliff.
Kiara catches herself on a ledge, but Zira is caught in much the same position as Simba once was. The dam below breaks, and the waters start rushing. Kiara tries to help, but Zira refuses it. She lets go and plunges down into the water, where she is pulled under.
Kiara and Simba climb back to the top. She is met by Kovu. Simba realizes he was wrong, and invites Kovu back into the pride. Both the Pridelanders and the Outlanders return to Pride Rock, where Kiara and Kovu are blessed by Rafiki.
The spirit of Mufasa praises his son.