The tree that the chipmunks Alvin and the Chipmunks live in is cut down and driven to Los Angeles. After JETT Records purchases it as a Christmas tree, the Chipmunks meet the struggling songwriter and composer, Ross Bagdasarian, Sr., who has had his latest song rejected by the company's chief executive, Ian Hawke, his former college roommate and best friend, who claims that there is "no sense in writing songs that no one is ever going to sing." Dave also once had a relationship with his next door neighbor, Claire Wilson.
During a benefit concert in Paris, France, David Seville is seriously injured from a backstage accident, when a cardboard cutout of Alvin sends him flying across the stage. Having to recuperate there, Dave asks his aunt, Jackie, to look after the Chipmunks, Alvin, Simon, and Theodore. Arrangements are also made for them to go to public school at West Eastman High School. After Jackie also has an accident, the Chipmunks are left in the care of Toby, Jackie's grandson.
David Seville, Alvin and the Chipmunks, and The Chipettes go on a vacation on a Carnival Dream. The Chipmunks and the Chipettes, especially Alvin, end up creating pandemonium. Later that night, after Dave leaves to eat at the captain's table and apologize for Alvin's behavior, Alvin sneaks out to the ship's casino, followed by Simon, who hopes to keep Alvin out of further exposure; meanwhile the Chipettes go to the ship's dance club, leaving Theodore alone in the room, watching an unsuitable monster movie. Dave discovers that his old boss, Alvin and the Chipmunks#Ian Hawke, is working as the ship's safety monitor dressed as a pelican, and is out to inform the captain if the Chipmunks and Chipettes cause more problems. Simon and Alvin are eventually caught in the casino, and are brought back to the room, along with the Chipettes, and all are accused by Dave for not being trustworthy. The next day, Alvin goes para-sailing on a kite, but the kite flies away with him and the other Chipmunks. Dave goes on a hang-glider to find them, but Ian attempts to stop him, and they both end up in the Pacific Ocean.
Alvin, Simon, and Theodore, along with the Chipettes - Brittany, Jeanette, and Eleanor, set up a surprise birthday bash for Dave that also serves as a good-luck party for the Chipettes, who are scheduled to be guest judges on ''American Idol''. Alvin invites and hires many people and celebrities to the dismay of Simon before Dave returns home in dissatisfaction. Nevertheless, Dave agrees to take them to mini-golf, and meet Samantha, the woman he has been dating for the past few months. While the Chipmunks like Samantha, her son Miles is a bully who physically abuses the trio. Later, the Chipmunks find an engagement ring in a bag Dave brought home and believe that he is going to propose to Samantha. They try to steal the ring, but are unsuccessful.