After finding success with a DNA restructuring formula in the first film, Sherman Klump has created another formula which enables those who take it to find the Fountain of Youth. He has also met and fallen in love with a colleague, Denise Gaines, who has developed a method to isolate genetic material and later becomes his fiancée. Together, their work has enabled Wellman College to receive a $150 million award from a pharmaceutical firm to the excitement of Dean Richmond, who has grown to adore and respect Sherman. Despite his good fortune, Sherman has a major problem: the personality of his vanquished alter ego, Buddy Love, is still ingrained inside him and causes him to act out in the same crass manner Buddy does. Sherman tries proposing to Denise, but then Buddy kicks in and makes it a perverted sex request, causing Denise to become mortified against him.