After arriving in Grand Harbor, Kevin finds them work as painters and decorators for a house nearby. Stifler is intrigued by the two sexy female owners, who appear to be lesbians, and excitedly breaks into their house while they're away. Jim and Finch follow him, trying to get him out, but they are caught by the owners, who relent on calling the police. They insist on the boys performing "like for like" homosexual acts on each other in return for being able to watch the girls doing the same thing. Oz and Kevin take turns watching up a ladder and listening on the walkie-talkie also in the room. The conversation is accidentally picked up and heard by many other people in the neighborhood.
After this, the boys plan to throw a huge summer party at the house, bigger than anything they've done before. Many concurrent stories run at the same time in the run-up to the party.
Nadia (Shannon Elizabeth), Jim's fling from his senior year, is travelling the United States and is dropping by to attend the beach party. Jim asks for sexual help and advice from band geek Michelle (Alyson Hannigan), his senior-year prom date, who is busy at band camp. While masquerading as a band camp member, the team leaders mistake him for Petey, a mentally-challenged trombone player, and usher him onto the stage in front of an impatient crowd. He proceeds to completely embarrass himself and the band members in front of the whole crowd.
Later at night, Jim decides to turn on a porn movie that Stifler rented, but accidentally uses superglue instead of lubricant to masturbate, permanently gluing his entire hand to his penis and boxer shorts. Exasperated and anxious, he takes out the porn cassette but ends up bonding the cassette to his other hand. Unable to open any doors, he climbs out of a window and stumbles onto the rooftop where he is caught by confused police officers. He is supported at the hospital by his father Noah (Eugene Levy, where he learns the news that he won't be able to have sex for at least a whole week, the same amount of time that the party is due to occur.
However, to Jim's horror, Nadia turns up early, having got bored of sightseeing. Jim's penis is still badly injured, so he pretends to be in a relationship with Michelle to put Nadia off. Jim and Michelle break the relationship off once he is ready to have sex with Nadia, but Michelle is saddened by it, having developed genuine feelings for Jim.
Meanwhile, Oz is lonely and missing his girlfriend Heather (Mena Suvari) who is away in Spain. They start having erotic phone sex to vent some of their frustration, but keep getting interrupted by various people. Finch has become involved in the sexual art of Tantra, and claims that through Tantric sex he can "make an orgasm last for days". He is waiting patiently for Stifler's mom (Jennifer Coolidge), who he slept with with in the first film, hoping she will show up and be willing to do it again. He thinks she arrives when a vehicle turns up after Stifler is talking on the phone, but it turns out to be Stifler's little brother Matt (Eli Marienthal), the star of later films. He spends the party night obnoxiously attempting to chat-up and seduce a few girls, but he doesn't sleep with any of them.
Finally, the party begins at the beach house. Kevin sees his ex-girlfriend Vicky but is crushed when he sees her with a new boyfriend and leaves to go to the beach by himself. Oz, Finch and Jim follow him down, where he confides in them that he never got over Vicky and that with the party, he was hoping to relive his senior year prom night, in particular, sleeping with Vicky at the end of it. The others help Kevin realize that it will never happen, and the quartet return to the beach house to party hard. Heather turns up to Oz's delight, and Stifler goes on to have a threesome with the beautiful lesbian neighbours who turn out to be straight after all.
Jim takes a walk along the beach with Nadia, who takes him to a lighthouse on the pier, but Jim calls it off early, revealing that he has fallen for Michelle. Nadia is disappointed that Jim chose a geek over her, but is happy for Jim and allows him to go and find Michelle, performing at band camp. He gatecrashes the performance with a trombone, just like he did before, but with much more confidence and aggression, and romantically makes out with Michelle in front of a heart-warmed crowd.
Meanwhile, the geeky Sherman (Chris Owen) mulls around at the party in a depressed mood, having abandoned his "Sherminator" mantra from the first film due to his abject failure with girls. By chance, he begins talking to the rejected Nadia, who is also depressed, and the two hit it off almost instantly. Nadia encourages Sherman to become the Sherminator once more, displaying a desire/fetish for geeks, and excitedly drags him into an upstairs bedroom where Sherman finally loses his virginity, to the shock of Stifler.
The morning after the party, a Mercedes coupe with darkened windows turns up at the house. Finch approaches to see Stifler's mom (Jennifer Coolidge) who has finally turned up. It doesn't take long before Finch gets into the car and drives off to the lakeside to have passionate sex with her.
