Focusing on the Madagacar penguins and taking place before the events of the first Madagascar, the youngest penguin on the team, Private, slips out of the zoo on Christmas Eve to find a present for a lonely polar bear named Ted. While roaming the streets of Manhattan, he is captured by Nana (the mean old lady from the first film) who mistakes him for a chew toy for her vicious dog, Mr Chew. The other three penguins, Skipper, Kowalski, and Rico, rescue Private from Nana's apartment before it is too late. They escalate into chaos against Mr. Chew, all-the-while, not noticed by Nana, who is occupied watching a football game. When they are done, they detonate the door, which is a running gag in the film, finally attracting Nana's attention and leaving Mr. Chew to take the fall for what the penguins have done to her place.
At the end of the film they invite Ted to their home. But he has already invited several other guests, resulting in a massive sing-a-long to a parody of Jingle Bells.