Movie 3 starts out with a before-the-story scene where Hudson Hatoff is directing some agents to the building Flippy crashed into to extract Flippy, who is currently disabled, to study him and Hudson gets a call from a mysterious employer while the agents, wearing safety suits in case disabled Flippy is still dangerous, extract Flippy and then everyone goes onto a tandem helicopter and then leave. We then flash forward to the present where Dog Man is chilling in Chief’s office chewing on a bone while Chief and Sarah are chatting. Then, Milly rushes in to catch Chief and Sarah making out and then Chief sees her and screams and asks Milly why she didn’t knock and Milly says it was too important because some dude with a mustache is here to see Chief and Dog Man and Dog Man starts yipping happily. The dude then comes in and introduces himself as Sam E Hamilton and he’s making a Dog Man movie. Everyone is intrigued and Chief implores him to tell them more but their faces of excitement turn to faces of horror as Sam tells them Dog Man is going to be a British dog secret agent who says British cuss words and throws dog-themed daggers at people, Chief is going to be some bumbling idiot whose entire personality revolves around donuts and being a male Karen, and Sarah is going to be a quirky Italian waitress who is an expert in archery and in love with New Mayor.
He also says Petey is going to be some misunderstood Russian spy emo cat bad boy that ladies have crushes on and can write poetry on the fly, Old Mayor is going to be a male mafia boss from Fiji, and Flippy is going to be a shark alien mad scientist who used to work at a fast food restaurant. Chief and Sarah are about to say something when Sam E Hamilton introduces the actress playing Sarah, an Italian lady named Yolay Caprese. Yolay says hi and Chief gets taken aback by Yolay’s beauty and gets flustered. Sarah notices this and elbows him then says hi to Yolay herself. Yolay then spots Dog Man and instantly falls in love with his cute, dog-like behavior and she goes and hugs him and asks him to be her bodyguard.
Sam then asks if they want to all go to Gassy Behemoth Studios where they’re filming the movie and the trio looks at each other and says sure because they want to see if the movie is going to be as bad as they think it’s going to be. Meanwhile, Petey is in cat jail getting lunch and Big Jim, who’s a server, asks if he wants cupcakes and Petey says sure. Then Big Jim asks Petey if he wants to hear about his dream and Petey says no but Big Jim doesn’t listen and tells him about his dream where a bunch of unicorns invited him to be their king and then they all danced in cupcake land and then Big Jim had to put on a costume and play with inflatable swords with some aliens who hate hugs. Petey tunes him out as he eats his cupcake and then he sees on the news that Timothy Helmeton is at Gassy Behemoth Studios talking about the new Dog Man movie and Petey gets mad and throws the rest of his food, hot dog casserole and some mashed potatoes that look more like slime, and it accidentally lands on Mr. Whiskers. Mr. Whiskers gets mad and throws his food at Tippy, who was sitting next to Petey, and then Tippy throws his food at Fluffy who then throws his food at Eddie (the eyepatch cat) and it devolves into a full-on food fight and Big Jim tries to get everyone to come together for a group sing-a-long and he gets smacked in the face with some cat’s mashed potatoes. The guards then come to stop it and Petey uses this opportunity to escape.
Meanwhile, the gang has just gotten to Gassy Behemoth studios and Timothy Helmeton has just finished his broadcast. Sarah sees him and gets mad while Timothy smirks and facetiously asks what she’s doing here and Sarah says she’s here to see the movie production. Then, Sam suggests they all go inside to stop things from getting tense and everyone agrees and Chief and Sarah’s faces once again turn to faces of horror after they see how yes, it can get worse. In addition to all the character changes, Old Mayor has a musical number where he sings about Fiji taking over the world, Flippy sets a painting that looks like a mix of Dr Scum and the Mona Lisa on fire because “society”, and Dog Man and Petey play a dramatic game of checkers after Petey attacks a pedestrian with his Russian spy gadgets. Sarah asks Sam if she can interview him privately and Sam says sure and leads her to his office leaving Yolay, Dog Man, and Chief by themselves and Chief asks Yolay if she’s single and Yolay says she’s happily engaged to Ding-Dong Magoo, the actor playing Dog Man and Ding-Dong Magoo comes and says he got iced coffee for the two of them and it’s waiting in his room and Yolay goes with him and says that Dog Man is freed from his job, leaving now just Chief and Dog Man.
Meanwhile, Petey has just arrived at his and Dr Scum’s hideout and sees the FLEAS there too now and he narrows his eyes at Piggy and Piggy says he’s willing to let bygones be bygones because they’ll be working together as villains. Petey is uneasy but agrees and then he asks where Butler is and Dr Scum says she got bored and decided to work as a cashier at a local coffee shop. Petey is peeved by this but dismisses it to present his new idea for a clone and the FLEAS and Dr. Scum think it’s a great idea so they order a cloning machine from Evil Inventions Inc and it comes in an hour. Petey clones himself but everyone is shocked when the output turns out to be a kitten that looks similar to Petey. Petey instantly falls in love with the kitten and calls him Lil Petey while the others see him as nothing more than a failed experiment but Petey convinces them to keep him as like an evil minion or smth and the others agree and Petey spends the rest of the day unsuccessfully trying to teach Lil Petey how to evil.
Meanwhile, Dog Man is hired by Sam Hamilton to be the studio’s night guard. At the same time, Petey and the others watch Sarah’s interview with Sam Hamilton and Petey says he’s going to go check the studio out soon. We then cut to Dog Man on night guard duty and he gets bored and starts doing crazy stuff like playing in the sets, eating any piece of paper/clay he can find, and doing karaoke to dog songs. While in the middle of doing karaoke to a song about a golden retriever dating a collie, he hears something and stops singing. He shuts down the karaoke and goes to the camera room and sees a figure in orange and black stripes in one of the rooms and he growls and goes to stop the figure but he first stops in a costume room and puts on a superhero costume and rushes to the room where he saw the figure and ounces on the figure who turns out to be one of the actors and he was wearing this orange with black stripes outfit because in one scene, Petey does a music video where the background dancers wear Petey themed science suits and in another scene, the same people wearing Petey-themed science suits start attacking people with guns shooting spicy chocolate fondue. Dog Man shakes his head as he thinks this movie is getting more and more ridiculous and he lets the dude go. Then, he takes off the costume and goes back to doing karaoke.
The next day, Sam Hamilton comes in and gets mad at the state of the studio and he tells Dog Man to get the heck out of here and Dog Man whines and Yolay says no and Sam asks Yolay if she wants to be replaced with Ally Nicoise and Yolay says that would be stupid because Ally Nicoise is only second-best and Sam says he’ll still hire her and Yolay gets mad and walks away as Dog Man is grabbed by the guard and kicked out of the studio. But as he’s walking out, he sees a man dressed as a clown who is preparing to enter the building with a tour group and he remembers reading in a news article that a superhero was attacked by a clown that was Petey in disguise. He starts growling at the clown until the clown disappears into the building with the tour group. Dog Man tries to go in but the guard stops him and angrily points to a poster saying “no dog-headed cops allowed”. Dog Man growls at him and then tries to think of a way to get in and he remembers his superhero costume so he runs back home.
Meanwhile, on the tour, the clown sees a clay model of Philly and makes a note of that on his phone and then he sees the scene where Petey does a music video with background dancers wearing Petey themed science suits and the clown makes a note of that too. Then, as he’s leaving, Dog Man, wearing his superhero costume, stops the clown in his tracks and starts fighting with him and when the clown’s wig starts getting unsteady, the clown quickly runs away to the villains’ hideout. He takes off his disguise to reveal he’s Petey and he says he got what he needed. Piggy says that’s good but Lil Petey needs to go because he’s being a bit of a troublemaker. Petey asks what’s he doing and Piggy says that Lil Petey was making comics randomly on the floor and he tripped Dr Scum, causing him to break some new test tubes he was holding and Lil Petey keeps pestering everyone with annoying “why?” questions.
Petey sighs and agrees to do something about it. He goes to Lil Petey, who is drawing a comic, and when Lil Petey sees him, his face lights up and he shows Petey his comic which is the two of them and Petey says it’s nice and, choking back tears, he tells Lil Petey to come with him and Lil Petey cheerfully comes with him and Petey tells him to get in a crate so they can play a game. Lil Petey agrees and hops into a crate and Petey grabs the crate and takes it to a park and he sits on a park bench and the two of them sit there for a while before Petey says he has to use the restroom and he tells Lil Petey to stay there and Lil Petey agrees. Petey then goes back to the hideout and tells everyone he did the deed. They cheer and Dr. Scum says that now they can start planning a big scheme and Petey gets a devilish grin on his face and says he took some notes at the movie studio and the others start smiling.
Meanwhile, Dog Man is running through the park at night for exercise and he sees Lil Petey sleeping and Dog Man gets sad so he takes Lil Petey home with him and inside the house, Lil Petey wakes up and asks where Petey is and Dog Man gets sad for Lil Petey and mad at Petey and he gives Lil Petey some food, reads him a bedtime story, and then tucks him into sleep after making the crate more comfortable. The next day, Dog Man and Lil Petey spend the day having bonding time doing stuff like going to the movies, going to the park, playing catch, and more. He then introduces him to Sarah, who’s super happy to meet Lil Petey, and Chief, who’s a little bit skeptical.
Meanwhile, the villains sneak into the studio disguised as cleaners and then release a living spray (that Petey and Dr Scum developed together) onto some robotic hot dogs and a giant clay model of Philly the cheesesteak gyro, causing them to come alive and start destroying things and Philly eats a few random workers and Sam screams like a girl and gets into a nearby golf cart and Ding-Dong Magoo and Yolay ask him to wait for them but Sam says he’s too important to be eaten by a clay cheesesteak gyro that came to life and speeds away. Petey then comes to the center of the city wearing a Petey-themed science suit with some dudes called the Despicable Dancing Dans all wearing the same outfit as Petey and Dog Man growls and Chief and Sarah ask what he’s trying to do and Petey laughs and says he’ll show them. Then, he and the Despicable Dancing Dans start dancing to a song that’s blasting from city speakers called Wicked Affair. Everyone else stands there confused and when he and the Dans are done, Chief asks what that was about and Petey laughs and says you’ll find out soon. The Dans then disperse and Petey, still laughing, joins the rest of the villains on the rooftop of a luxury hotel.
Our protags, meanwhile, are still trying to figure out what Petey was trying to do when Yolay and Ding-Dong Magoo come and tell them that crazy stuff is going down and the protags look and see that they’re right and they get ready to fight but then Sarah asks who will take care of Lil Petey and Dog Man realizes he can’t take Lil Petey into the fight so he asks Yolay and Ding-Dong to take care of Lil Petey and they agree and the protags go and fight the bad guys. They start with the robo-hot dogs and the hot dog leader laughs at Dog Man, Chief, and Sarah and tells them they’re too misfit-ish to be cool and Dog Man and Chief are confused but Sarah says that the hot dogs are more misfit-ish because hot dogs aren’t living beings and the hot dog leader gets mad and tells his minions to attack and Dog Man tries to eat one of the hot dogs but he spits it out after realizing it’s not a real hot dog. The hot dog leader laughs at Dog Man and Dog Man jumps on him and rips off his limbs while Sarah hits other hot dogs with her purse and Chief uses a device disguised as a razor to electrocute the hot dogs and make them go haywire. The villains see this and get mad and Petey yells at Philly and tells him to attack the heroes. By now, the heroes have defeated all the robot hot dogs and they’re high-fiving each other but then Philly comes and Dog Man starts salivating because he thinks clay is yummy and he starts nibbling at Philly’s foot but Philly just gets mad and eats him and Sarah and Chief are horrified and jump on Philly to try and attack him.
Sarah tries using her martial arts skills against Philly and Chief tries to use his gadgets. After Chief uses one of his gadgets to blind Philly in one eye, Philly eats both Chief and Sarah and Yolay sees this and tells Ding-Dong to stay with Lil Petey while she fights Philly. Yolay then goes and fights Philly but also gets eaten and Ding-Dong starts crying and the villains laugh. Meanwhile, in Philly’s stomach, the crew reunites and they see the workers who got eaten and Sarah asks what they’re going to do since she can’t really use her martial arts skills inside his stomach and Chief tries to use one of his gadgets to slice through Philly but they’re too deep inside and Dog Man tries to eat Philly and Yolay has a big brain moment and suggests that the three of them use their skills at the same time and Sarah, Chief, and Dog Man agree that it’s a good idea and put it in motion. Meanwhile, Ding-Dong is still crying over Yolay and Lil Petey decides to go and face Philly himself and the villains are all laughing and toasting milk cocktails but then they hear a tiny scream and they look down to see Lil Petey yelling at Philly and telling him to bring his friends back and the FLEAS, Dr. Scum, and Philly start laughing but Petey is freaking out in his mind because he doesn’t want something bad to happen to Lil Petey.
Philly then starts trying to grab Lil Petey and Petey says no and Dr. Scum and the FLEAS ask him what’s wrong and Petey says Philly is going to eat his son. Dr. Scum says that Lil Petey is NOT his son, he’s a failed experiment and Petey says to not talk about his son like that and Dr. Scum says that if Petey tries anything, he’ll have to go through him and the FLEAS. Petey then grabs a gun out of his pocket and aims at the FLEAS and turns them microscopic and traps them in a hamster ball and Petey throws it off the side of a building and Dr. Scum tries to grab it and Petey pushes him off the edge. Then, Petey shoots a gun at Philly that explodes him and right at that moment, Dog Man, Chief, Sarah, Yolay, and the random employees escape Philly’s stomach and Ding-Dong sees this and runs to the crowd and Dog Man, Chief, Sarah, Yolay, Ding-Dong, and Lil Petey all embrace each other in a hug. Chief then sees that Dr. Scum is about to fall to the ground and grabs him using one of his gadgets and he handcuffs him.
Petey then comes down to the ground using a parachute and everybody, except Lil Petey, looks at Petey with their eyebrows raised and Petey says he knows he’s a bad cat and he takes full responsibility for his actions and everyone is shocked except Lil Petey who runs up to Petey and hugs him. Seeing this, Chief decides not to send Petey to jail but place him under house arrest so he can at least be with his son. Then, everyone except the workers embrace each other in a hug. We then fast forward a few months where everyone, except Petey, is watching the movie together and laughing and after the movie’s over, Dog Man drops off Lil Petey at Petey’s house and they look up at the stars together as Petey plays Grace’s ukulele. There’s also a post-credit scene where Hudson, wearing a safety suit, is supervising a group of scientists in safety suits who are studying a dead fish cyborg in a highly secure facility.