It is time for commemorations in Kingston Falls and twenty years have passed since the disaster that occurred when the Gremlins came to town: plundering, destruction and persecutions have left a bitter memory in the minds of the peace-loving residents of this small town. A large party is organized with all the town's inhabitants to pay homage to Gizmo the courageous Mogwaï and Billy, the 2 heroes and Gremlin fighters. But inadvertently that night, Gizmo gets splashed with just enough water to provoke the emergence of a new Mogwaï with a white mane, Stripe, who has plenty of mischievous intentions. Stripe manages to stir up trouble in the dance hall and locks all of its occupants up tight so that he can attempt to take control of the city again, multiply and let chaos rule.