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 amusement), ever since he rampaged through his hometown last Christmas. To get away from the stress, Sam's wife Anne (Eileen Seeley) 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). Sam reluctantly agrees, after reinforcement from his doctor (Ian Abercrombie).
Meanwhile, the FBI has dug up the antifreeze 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 antifreeze used to dissolve him, Jack is linked to Sam's psyche.
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 Ashlea (Shonda Farr), impaling his icicles into Paisley (Granger Green), and stabbing Rose (Jennifer Lyons) in the eyes with a pair of tongs. 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 (David Allen Brooks), suspects that Jack has returned.
Jack continues his rampage, killing a beach model named Sarah (Melanie Good) by making her head explode (after she swallows him 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 agrees to an alliance in order to stop Jack Frost. Sam, Captain Fun, and Manners stage a trap to capture Jack. This fails as the snowman they capture was really the Colonel in costume.
After slaying another beach model named Cindy (Stephanie Chao) by freezing the pool she is swimming in and drowning her, Jack decides that the tropics are a bit too warm and freezes the place, causing it to snow and freeze the lifeguard (Kerri V. Griffin). The party guests begin to play around in snowball fights when Jack enters the fray, killing at least another dozen. Sam, Anne, Marla, Manners and Joe lock themselves up in their room, using antifreeze to keep Jack at bay.
Sam and Manners decide to 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 antifreeze, to which Bobby suggests they use the coolant for the generator, which uses the same material. Luring Jack into a trap, Sam once again tricks Jack into a pool of coolant. Unfortunately, this does not work, as Jack has become much more resilient to the antifreeze 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 the snowball and it "hatches" and becomes a baby snowman, who kills Captain Fun. 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 the 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, due to Sam being allergic to bananas. As a result, Jack would share the same vulnerabilities, since he absorbed some of Sam's genetics in Snowmonton. Everybody soon makes a big batch of banana smoothies, which they then use to kill the tiny snowmen. However, one of them crawls back to Jack, fatally wounded. Jack picks it up and observes it, and then watches it slowly die in his arms.
Jack sheds a tear, mourning the loss of his new family. He then becomes angry, stabbing the Colonel through the head with an icicle from behind and slitting 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. 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 the two sailors on the supply boat are crushed by a giant carrot, implying that Jack is still alive and has become kaiju-sized. 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 there.