Niles, Jane, Cliff, Rita, Vic and Dorothy are still trapped in miniature-size, weeks after the events of last season. Camped out in Cliff's miniature race-track set up, Dorothy tries to befriend both Cliff and Jane, while Larry does his best to figure out a way to restore everyone to their normal size once again. Meanwhile, Rita asks Vic for help in using her elastic abilities for good, while Jane hides out in the Underground and Niles tries everything to earn forgiveness for his past deeds. In the end though, Niles will have to sacrifice something very precious, by making a bargain with Willoughby Kipling in order to help the team and keep his daughter safe – and the world safe from her imaginary friends.

In the wake of a terrifying omen, Niles and Rita enter the interdimensional palace of the infamous Red Jack, who feeds on pain and has taken Larry prisoner. Jane is called to The Underground to receive an ultimatum, while her physical body travels to Florida with Cliff, who's eager to prove he's a good father. Back at the manor, Dorothy's game of hide and seek ends badly.