After Po is tapped to become the Spiritual Leader of the Valley of Peace, he needs to find and train a new Dragon Warrior, while a wicked sorceress plans to re-summon all the master villains whom Po has vanquished to the spirit realm.

Po is gearing up to become the spiritual leader of his Valley of Peace, but also needs someone to take his place as Dragon Warrior. As such, he will train a new kung fu practitioner for the spot and will encounter a villain called the Chameleon who conjures villains from the past.

As Po has been the Dragon Warrior and defeated many foes, he has to resign and become the Spiritual Leader of the Valley of Peace. So he must choose a successor to take his role as Dragon Warrior. But unfortunately, a new shapeshifting villain named the Chameleon will challenge him along his journey as she brings back the three opponents from Po’s past! Luckily, he meets a plucky fox named Zhen who guides him through a big city and tries to lead him into the Chameleon’s lair.

On top of a mountain, a bunch of mountain goats are mining, when Tai Lung shows up and destroys the mountain.

Meanwhile, Po is fighting off an evil stingray and once he’s done, Shifu asks him to talk, but Po just wants to hang around and have fun with the animals of the valley. Shifu finally gets Po to talk and on the steps to the Jade Palace, he tells Po, who is holding Oogways staff, to find a successor as the dragon warrior, much to Pos annoyance.

The following day, Po and Shifu watch all 5 candidates perform, but Po struggles to pick one and leaves it to his finger to decide, of which eventually chooses him, much to Shifus anger. Po walks back to the palace to find someone sneaking in and attempting to steal items. Po and the fox named ‘Zhen’ battle each other and Po defeats her, sending her to prison. Later, Po hears of Tai Lungs return and goes to visit Zhen, who gave him a clue earlier.

In the prison, Zhen tells him that Tai Lung isn’t back, but is instead, the work of an evil sorceress shape shifter called the Chameleon. Po wants to take her down alone, but Zhen says if he is going to defeat her, he’ll need her help. Po and Zhen head off to juniper city, to the village’s excitement, however both of Pos dads, Ping and Li worry about him and soon go after him.

Po and Zhen enter a restaurant and destroy the place, as Zhen tries swindling them out of mahjong tiles, but the duo quickly escape with the captain, who steers the boat, but also drinks a lot. On the boat, Po has a vision of what the Chameleon wants and the duo arrive at Juniper City.

In the streets, Po learns that Zhen is a wanted thief and the police go after them, but they manage to escape to the Den of Thieves, where Zhen reconciles with Han, who took her in when she was younger. The next day, Po and Zhen escape to the lair of the Chameleon and go in. The Chameleon captures Po in a cage and Zhen steals the staff and gives it to the Chameleon, revealing she has been working for her the entire time. The Chameleon tells him that her true passion is Kung Fu, but was turned down by every training place, because she was too small and decided on sorcery instead. Po tries to escape, but cannot break the cage, so he destroys the ground and falls into a pit of guards. However, Po comes back and asks Zhen to give him back the staff, but it is the Chameleon in disguise and she chucks him off the cliff.

The Chameleon uses the staff to gather all the power from all the Kung Fu masters of the past. Zhen realizes what she had done and goes to find Po.

Po talks to his dads about change and they tell him that change isn’t always a bad thing. Po becomes encouraged by this and goes back to stop the Chameleon, but Zhen doesn’t want him to get killed and tries to stop him, but fails.

After this, Zhen goes back to the Den of Thieves and encourages them to help her defeat the Chameleon and save Pos life. Back in the room of the lair, Po tells Tai Lung that he lost the staff of Wisdom, which makes him lose more faith in Po. The Chameleon and Po fight each other, but the Chameleon uses the power of the masters to give her more strength, before she transforms into all the masters in one, which greatly amazes Po. Zhen tries to get involved, but ends up falling with the rubble. The Chameleon transforms into Po and the true Po slaps the imaginary ones butt. The Chameleon captures him in yet another cage, but Zhen uses the move Po had taught her earlier to defeat the Chameleon and give the Kung Fu villains their powers. Po uses the staff of wisdom to send all the villains back through the door, into the spirit realm.

Back at the jade palace, Po tells Shifu that he has chosen Zhen as his successor, which makes Shifu spit out his tea and he goes to the tree to meditate all of his stresses away. Zhen doesn’t believe she can be, but Po gets the furious five to help train her.