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Sam Tiler (Christopher Allport reprising his role) has been struggling to recover from the encounter with the Mutated Snowman known as Jack Frost (much to everyone else's disbelief and humor), ever since he rampaged through his hometown last Christmas. To get away from the stress, Sam's wife, Anne (Eileen Seeley reprising her role) suggests a tropical vacation in a cabana far away in the Pacific for the wedding of his deputy, Joe Foster (Chip Heller reprising his role) and his secretary Marla (Marsha Clark reprising her role). Sam reluctantly agrees, after reinforcement from his doctor (Ian Abercrombie).
Meanwhile, the FBI has dug up the anti-freeze used to dissolve Jack in the first movie, attempting to test it for remains of the genetic material. One of the janitors (Brett A. Boydstun) accidentally spills a cup of coffee into the tank of antifreeze, waking Jack up and causing him to reform and break free. He heads for the tropics, due to the idea that since Sam was wounded by Jack (voiced by Scott MacDonald who reprises his role) in the first movie, and his blood dripped into the anti-freeze used to dissolve him, Jack is linked to Sam's psyche.
Along the way, he kills a couple of stranded boaters (Doug Jones and Stephen C. Marchand) for a carrot nose.
Sam, Anne, Marla and Joe, arrive at the tropics to a greeting by the eccentric Colonel Hickering (Ray Cooney) and his assistants Captain Fun (Sean Patrick Murphy) and Bobby (Tai Bennett). The festivities quickly begin, but things get deadly when Jack washes ashore and kills three ladies by: transforming himself into an ice anvil and crushing Ashley (Shonda Farr), impaling his icicles into Paisley (Granger Green), and stabbing a pair of tongs into Rose (Jennifer Lyons)'s eyes. The next morning, the Colonel discovers the bodies and tries to cover up the whole mess, as he does not want this to ruin his resort. However, the island's manager, Agent Manners (from the first movie, now portrayed by David Allen Brooks), suspects that Jack has returned.
Jack continues his deadly yet comedic rampage, killing a beach model named Sarah (Melanie Good) by making her head explode (after she swallows him into her body as a piece of ice) and stabbing her cameraman (Paul H. Kim) to death with his carrot nose. Sam begins to suspect that something is amiss when he runs into Manners, who is wearing an eye patch after his injuries from Jack in the first movie. Manners says that he fled to the tropics to get away from any kind of snow or snowman, and that he believes, with Sam, the Colonel, and his assistant's help, he can trap and finish off Jack once and for all.
So, Sam, the Colonel, and Manners stage a trap (in the middle of a party, as was Captain Fun's idea, much to Sam's annoyance) to capture Jack. This fails as the snowman they capture was really the Colonel in costume. However, Sam says that he saw a REAL carrot on the ground, not the one on the Colonel's snowman. This only fuels his suspicion that Jack is on the loose.
Jack, after slaying another beach model named Cindy (Stephanie Chao) by drowning her in the pool by freezing it, decides that the tropics are a bit too warm and freezes the place, causing it to snow and freezing the lifeguard (Kerri V. Griffin). The party guests begin to play around in snowball fights when Jack (after ripping a teen (Brian Gross)'s tongue out, while he got it frozen to a pole) enters the fray, throwing deadly snowballs and icicles that tear off a man (Jack Dougherty)'s arm and pin people to walls through their heads, killing another nine of them. Sam, Anne, Marla, Manners and Joe lock themselves up in their room, using antifreeze to keep Jack at bay.
Sam and Manners decide to go find help, and end up finding a room where the Colonel, Captain Fun, and Bobby have barricaded themselves in. Sam asks the three of them where they can find anti-freeze, to which Bobby suggests they use the coolant in the freezer (which uses the same material). Luring Jack into a trap, Sam once again tricks Jack into a pool of anti-freeze. Unfortunately, this does not work, as Jack has become much more resilient to the anti-freeze due to his time in the lab. Jack spits out a snowball and flees, followed by Manners, into the woods.
Sam, Anne, and the others observe a snowball. Joe believes that it is just a normal snowball, but Anne says that is impossible (due to it being on an oven for 15 minutes and not melting). Eventually, it "hatches" and becomes a baby snowman, who comically kills Captain Fun with an icicle through the eye. They trap the snowman in a blender and try many different ways of killing it, all of which fail.
Meanwhile, Manners has followed Jack to a shed, where he sees that Jack has spit up many, many snowball children. He calls the others and tells them what he has seen, but before leaving he is attacked and devoured by the tiny snowmen.
Sam, in panic since the antifreeze does not work, is pushed to the side as Anne takes charge in order get Joe and Colonel to go around the island to trap as many of the snowmen as they can until the supply boat (which is coming to the island to drop off more supplies) comes, while Bobby, Marla and Sam wait back in the kitchen. During the search, the snowmen kill seven more tourists. Eventually, Anne realizes that they can be killed by bananas (since Sam is allergic to bananas, so is Jack, since he absorbed some of Sam's genetics while fighting). So the group mixes hundreds of bananas together and kills off all the baby snowmen.
This angers Jack, who stabs Colonel through the head with an icicle from behind and slits Bobby's throat with another icicle. Marla and Joe flee and lock themselves in the freezer with Captain Fun's body, while Anne is attacked by Jack. Just before Jack can kill her, Sam snaps out of his paranoia and shoots Jack with a banana attached to an arrow, causing him to explode. Anne and Sam embrace each other, and walk towards the ocean, prepared to leave the island with any of the other surviving guests.
During the credits (in comical monster movie style, complete with bad Japanese to English translations, DUBs, and actors) the two sailors on the supply boat are crushed by a giant carrot, implying Jack is still alive and that there will be a sequel. After the credits roll, we're shown that Joe and Marla were accidentally left in the freezer by Sam and Anne, and it's implied that the couple froze to death in the freezer.