Remembering his dream to visit New York City, James and the insects decide to go there with Mr. Centipede steering the peach. They use Miss Spider's silk to capture and tie a hundred seagulls to the peach stem, while battling against a giant robotic shark. Miss Spider reveals to James that she was the spider he saved from Spiker and Sponge. The next day, James and his friends find themselves in The Arctic; the Centipede has fallen asleep while keeping watch. After hearing Mr. Grasshoper wishing they had a compass, Mr. Centipede jumps off the peach into the icy water below and searches a sunken ship for a compass but is taken prisoner by skeletal pirates. James and Miss Spider rescue him and the journey continues.
As they reach New York City, a storm appears, along with the ghostly rhino. James is frightened but challenges the rhino and gets his friends to safety before the rhino strikes the peach with lightning; James and the peach fall to the city below, landing on top of the Empire State Building. After he is rescued by police officers, firefighters, and the largest crane in New York City, Spiker and Sponge arrive and attempt to claim James and the peach. James reveals Spiker and Sponge's abusive behavior towards him to the crowd, who gasp in shock at the revelation. Spiker and Sponge become enraged by James' betrayal and attempt to kill him. The bugs arrive and tie up Spiker and Sponge with Miss Spider's silk and the two aunts are taken away. James introduces his friends to the New Yorkers and allows the children to eat up the peach.
The peach pit is made into a house in Central Park, where James lives happily with the bugs, who form his new family and also take important jobs in the city. James celebrates his 9th birthday with his new family.
In a post-credits scene, a new arcade game called "Spike the Aunts" is shown, featuring the rhino.