NOTE: This spoiler written by David Luke Gazoul, author of Artrex, Dark Hero available at www.iuniverse.com
The film opens like the first movie with a storybook opening and telling the tale of princess Fiona who was trapped in a tower due to a curse placed on her as a child. It goes on to say that Fiona waits in the tower for her Prince Charming. We dissolve into a shot of Prince Charming riding his horse across different landscapes to reach the tower. We then realize that the narrator of this story IS Prince Charming and he's narrating himself even as he takes off his helmet (giving a super-model wave of his golden head of hair) and proceeds up the tower to where Fiona WAS held captive. Prince Charming enters the bed chamber, throws back the curtains to find the Big Bad Wolf from the first movie still dressed as Grandma laying there. "What?" Prince Charming asks where is Princess Fiona and the wolf replies "on her honeymoon."
We then cut to a musical montage of highlights from Shrek and Fiona's honeymoon including getting chased by villagers with pitchforks, having a picnic on the beach
and a romantic mud bath dimly lit by jars of captive fairies. Once that's concluded, Shrek and Fiona return to the swamp to find Donkey sleeping in Shrek's mess of a home. Donkey reveals that he and Dragon, his "woman" from the last movie, are having problems and are not speaking. Shrek convinces Donkey to leave so he and Fiona can have some "alone time" but when Donkey finally leaves he walks back in the front door about five seconds later saying they have visitors.
They all walk out of Shrek's house to see a flamboyant group of trumpeters announcing a royal invitation from Fiona's parents (known only as the King and Queen of the Kingdom Far Far Away) asking for Fiona "and her husband" to come see them in the land of Far Far Away where they will celebrate their daughter's wedding. Fiona wants to see her parents again but Shrek thinks it's a very bad idea. He doesn't want to go, but Fiona's demands cannot be swayed.
Next, we see them packing up their carriage. Donkey has pretty much invited himself to come along to see the castle of Fiona's family. Shrek wonders who will watch over his home while he's gone and is immediately answered by a ragtag group of "volunteers" made up of the Three Little Pigs, the Three Blind Mice, the Big Bad Wolf, Pinocchio and the Gingerbread Man (who has both of his legs back by the way).
We then have a montage of shots of the carriage crossing many different landscapes in the long journey to Far Far Away and Donkey constantly asking "are we there yet?" When they finally get there, Far Far Away turns out to be a parody of Hollywood, California dotted with fairy tale references. They pass Cinderella's mansion, a shop called Vesarchery, and see a sign of large white letters on the hills displaying the name of the kingdom (just like the Hollywood sign).
At the castle, a huge gathering is in attendance to welcome Fiona and her husband. Fiona's parents are waiting at the other end of the red carpet to greet them. Shrek is very nervous. When the happy couple emerges from the carriage, the entire castle falls dead silent in shock. Donkey makes the quick decision to go "park the car" in order to avoid the awkward situation. The carriage speeds away and Shrek and Fiona are left to make the long walk down the red carpet amidst fearful and hateful stares. Shrek keeps reminding Fiona "I told you this was a bad idea." After more awkward moments of the parents meeting their new son-in-law, they arrange to have dinner together that evening.
At dinner, things are going horribly and they get slightly worse when Donkey shows up and seats himself at the table next to Fiona's mother. The Queen seems consistently indifferent about the whole scenario. The King definitely disapproves of Shrek. Bad manners and sly insults quickly escalate to raised voices. Fiona leaves the room in tears. She retreats to her old bed room and looks about her childhood possessions. When a tear falls from her eye, her Fairy Godmother appears and immediately begins to give the female ogre a make-over, complete with singing and dancing furniture. Fiona cuts the number short when she says she "doesn't need any of this" when Shrek walks in. Apparently, this is the first that Fairy Godmother ever heard that Fiona was already married to her true love and is now an ogre permanently. Seeming a bit perturbed by this, she leaves her card which reads "happiness is only a teardrop away" but Shrek takes the card saying Fiona will never need it. The Fairy leaves and Shrek starts packing for their return to the swamp. Fiona does not want to leave yet, asking Shrek to give her parents another chance. Shrek refuses, demanding they return home and never come back. The argument ends with Fiona walking out of the room saying, "I've made changes for YOU Shrek. Think about that."
In a nearby bed chamber, the King and Queen are discussing what to do about the unexpected fact that their son-in-law is an ogre. The Queen doesn't seem to mind as long as their daughter is happy. The King is dead set against the relationship. Suddenly a flying, pink car propelled by fairy dust appears outside the bed room balcony. The King nervously hides this from the Queen (Important) and says he needs to step out for a moment. He gets into the car, which flies off into the night.
Inside the car, it is revealed that Prince Charming is the Fairy Godmother's son and she had a deal with the King that her son would marry Fiona. The King says that it's not his fault Prince Charming took too long to rescue Fiona. But the Fairy demands that he do something about it in order to hold up his end of the deal. She suggests that he simply (and quickly) have Shrek killed.
The movie then takes us to a dimly lit bar called The Poisoned Apple in an evil-looking part of town. The King (badly disguised in a cloak and hood) enters the bar and whispers to the bartender that he needs someone killed. The bartender asks who and he says an ogre. This brings a fearful reaction to everyone in the bar. The bartender says only one person in the bar is capable of a job like this. The King then proceeds to a very dark room where a mysterious "hit man" greets him with a pair of yellow eyes glowing in the darkness, nothing else is revealed about the character in this scene. For a bag of gold coins, he accepts the King's job.
Back at the castle, Shrek is having trouble sleeping. Fiona is in bed beside him, sleeping soundly. Shrek gets up and looks around. He finds a diary that Fiona kept while she was a child growing up with her curse (i.e. never being allowed outside when she turned into an ogre, how she hoped and longed for her prince charming to save her). The diary ends as her parents send her away to live in the tower. There is a knock at the door, it's the King. The King offers to make peace with Shrek by inviting him out on a hunt the next morning. Shrek reluctantly accepts for Fiona's sake.
The next morning, Shrek and Donkey are walking about in the woods looking for the King to join them when the mysterious hit man with the yellow eyes reveals himself...to be an orange cat only one foot tall named Puss de'Boots (he even carves a "P" in the nearest tree trunk to demonstrate his swordsmanship). Shrek and Donkey are unimpressed until Puss leaps at Shrek and claws him up something fierce. When Shrek survives the very painful attack and knocks the cat aside, Puss admits defeat and declares that he now has a kind of "life debt" to Shrek. Shrek is suddenly overcome by the cats cuteness (one of the funniest moments in the film) but Donkey is still skeptical about trusting another talking animal. Puss reveals that the King hired him and Shrek is distraught about what to do. What would be best for Fiona and her family? Then he has an idea, he pulls out the card the Fairy Godmother left and asks that Donkey cry to activate the card. Puss helps out by hurting Donkey and the card is activated...but they only get the answering machine not the real Fairy Godmother. So they decide to go to Fairy Godmother's base of operation: a factory for magical potions.
At the factory, they lie their way pass the front desk and into the Godmother's office. She refuses to help Shrek saying that while she specializes in happy endings, "Ogre's don't live happily ever after!" She kicks Shrek out of her office. Shrek, Donkey and Puss then sneak into a kind of library for potions where they find a Happily Ever After Potion (I'll call it H.E.A. potion) with some warning labels written on it. They don't have time to read it because they've been spotted and have to make a run for it--but they DO manage to leave the factory in a huge mess during the escape. Fairy Godmother, while assessing the chaos her factory has been left in, asks what Shrek stole. When she is told it was the H.E.A. potion, she realizes that this might work to her advantage.
Shrek, Donkey and Puss now take a look at the H.E.A. potion. It says it will grant divine beauty for you AND your true love making everything fine (something like that). Shrek is wary at first but decides he'll do anything for Fiona. Donkey warns that once he drinks the potion he can't undo it. Donkey offers to take the first sip, just to see what the potion does, in the process a drop of it is spilled on a nearby mushroom. Donkey takes a gulp of the potion, nothing happens. Shrek drinks the rest of the potion, still nothing. It starts to rain so the three hide in a nearby abandoned stable to get out of the rain. There, Shrek and Donkey suddenly pass out. We see the mushroom shimmer and then transform into a rose. Back at the castle, Fiona has been looking for Shrek all day long when SHE suddenly passes out, her parents put her to bed and from outside her bedroom window, we see the same light of magical transformation. From outside the abandoned stable, we see the same light again.
The next morning Shrek wakes up to find he's been transformed into a very handsome human and Donkey has been transformed into a beautiful white stallion. The three then read the rest of the warnings on the H.E.A. potion and find these transformations will only become permanent if the drinker finds and kisses his true love by midnight. Shrek and Puss ride on Donkey (as a horse he is big enough to carry them both) to the castle where Fiona wakes up to find out she's been turned back into her human form. She runs about the castle looking for Shrek. Shrek runs through the castle to Fiona's room. They don't see each other. When Shrek arrives in Fiona's room, Fairy Godmother is there waiting for him and magically locks him in the room. Fiona then runs into Prince Charming whom she has never seen before. Prince Charming claims to be Shrek saying they were both transformed after he drank a H.E.A. potion. Fiona can't believe it at first but her parents show up. The King is perplexed at first but begins to catch on and show approval of this arrangement. Fiona slowly agrees too, but she can tell "Shrek" is not himself.
Back in Fiona's room, Shrek watches this happening, though he cannot hear any of it. He pounds on the window calling to Fiona, but she cannot hear him. Fairy Godmother then convinces Shrek to simply enjoy his new beauty and go away because Fiona is obviously happier with her new look and her intended prince. Shrek, seeing Fiona and Charming arm in arm, is convinced of this so he leaves.
Shrek, Donkey and Puss all go to The Poisoned Apple. Puss is doing shots of milk, the other two are sulking. Shrek overhears someone talking outside the bar and realizes that it's the King and the Fairy Godmother talking about the deal they made. Fairy Godmother says to the King "I gave you YOUR happy ending, you will give my son the same or I will take yours away." The King refuses, he doesn't want to force his daughter to be with someone she doesn't love. Fairy Godmother gives him a love potion: if Fiona drinks it, she will fall in love with the next man she kisses. The King agrees to give Fiona the potion and Shrek is spotted spying on them. Shrek them jumps on Donkey with Puss and they make a mad dash for the castle to tell Fiona the truth.
We now cut back to the swamp at Shrek's house where Gingerbread man and company are watching TV for the latest updates from the red carpet of Fiona's star studded wedding celebration. They change the channel to watch KNIGHTS (a deliberate spoof on the show COPS) where they watch Shrek, Donkey and Puss get arrested by the knights, chained up and thrown into a wagon. Even though Shrek is in human form they recognize his voice as he calls for Fiona saying he has to stop the party. Gingerbread and the gang realize they have to help Shrek.
That evening, the King prepares two cups of tea to take to his daughter, pouring the love potion in one of the cups. When the King brings her the tea, Fiona is talking about how "Shrek" has changed and he doesn't seem like the man she fell in love with and she loved Shrek the way he was. At the last second, the King gives her the other cup of tea, the one WITHOUT the love potion.
Meanwhile, Shrek, Donkey and Puss are all in prison, chained to the walls when Gingerbread and gang show up to break them out (how they got from the swamp to Far Far Away so quickly I have no idea, maybe they jumped through a plot hole). After they free the trio from prison, Gingerbread explains to Shrek that breaking into the castle to crash the party won't be as easy. The drawbridge is up and there are guards everywhere. Shrek asks "Gingerbread, do you STILL know the Muffin Man?" Gingerbread says yes, the Muffin Man lives on Drury Lane which happens to be nearby.
Anyway, they go to the Muffin Man who instantly creates a Gingerbread man taller than the castle wall named Mongo. They direct Mongo to storm the castle and pull open the drawbridge so that all of our heroes can jump into the castle. While running through the castle halls being pursued by guards, Puss de'Boots stops and says he will now repay his "life debt" to Shrek. He tells them to go on, he will handle the guards. The guards catch up to where Puss is waiting for them and the feline fighter is doing his "cutest-little-kitty-in-the-world" bit that charmed Shrek. This distracts the guards. Puss de'Boots springs into action and kicks their butts.
Just as Shrek shows up to the party, Prince Charming is about to kiss Fiona after some romantic dancing. When he does kiss her, she can finally tell he is not Shrek and since she didn't drink the love potion, she head butts Charming into unconsciousness--much to Fairy Godmother's surprise.
We then have a bit of action as the heroes manage to take away the Fairy Godmother's magic wand. Fiona finally recognizes Shrek in his human form. Prince Charming wakes up and throws his mother her wand and she fires a blast at Shrek. The King jumps in front of the blast, taking the shot for Shrek. While the shot hits the King it is also reflected off the King's silver armor and hits Fairy Godmother who is then reduced to a cloud of pink bubbles (meaning I don't think she'll be in Shrek 3).
They look to the King and find only his clothes...when suddenly a frog crawls out of the clothing. It's the King! THIS was the deal he made with Fairy Godmother, she turned him from a talking frog into a prince in order to win the heart of Fiona's mother. The Queen never knew, but she declares she loves her husband no matter what. Then the clock starts to strike midnight. Remembering the warning on the H.E.A. potion Shrek quickly explains that if Fiona wants the two of them to stay as they are (i.e.beautiful and human) all she has to do kiss him before the last stroke of midnight. Fiona is moved by the thought of Shrek wanting to give up being an ogre for her, so she decides not to kiss him. The potion's magic wares off and they both turn back into ogres. Donkey turns back into a donkey, to his dismay. But Shrek and Fiona truly love each other the way they are and her parents accept that, wanting only to see their daughter happy.
Everyone sings and dances. The end.
NOTE: obi-quiet writes in to say...
At the end of the credits, the dragon comes back to meet Donkey. Donkey explains that he had to go with Shrek and help him out with a few things. Then Dragon shows Donkey a suprise... about 6 half-dragon, half-donkey babies.