The film begins as Dr. Arthur Neuman is giving a tour of the Hall of Norse Mythology in the Edge City Museum to a mysterious black figure. After he talks about the imprisonment of Loki in the first film, the figure transforms into Loki! He takes the mask only to realize it is fake and begins a search for the real mask. Meanwhile, in the town of Fringe City, Tim Avery is a budding cartoonist who has just married and has a wife who is pregnant, although he doesn't quite feel ready for fatherhood. He is also friends with his dog, Otis. Otis finds the mask in a creek behind Tim's house and Tim decides to wear it. After Tim's son is born and has the same powers as Loki. Otis also becomes jealous of the new baby and accidently puts on the mask, becoming a crazed version of himself plotting to get rid of the baby.