The movie opens with a flashback that takes place 25 years before the first film, a young boy named Lucas is arguing with his father and older brother in their house during a storm, when he is suddenly transported to a magical temple hidden in another dimension. He meets an Ice queen, who has spent centuries searching for a new champion who is "pure of heart" after the previous champion, driven by revenge, released their obtained ice powers and caused an ice age centuries ago. Lucas is deemed unworthy due to a desire to abuse the powers, is rejected and sent back to his house. Shortly afterwards, a young girl named Elsa is rewarded with the powers since the queen is about to drop dead.
Present day, after the first film's events, Elsa's powers are becoming uncontrollable, she eventually decides to run away to avoid killing anyone. Meanwhile, an adult version of Lucas has made it his lifelong obession to obtain the powers he was denied as a kid. He is interrupted by none other than Anna, she makes an offer to reward him a hefty prize in exchange for Elsa's head. Anna's motivation is driven by jealousy of her sister.
Lucas and Anna go to a dark cave and summon 7 towering demons to use a weapon against Elsa. First, Lucas goes to his house from the opening and interrupts a peaceful family dinner, he uses the demons to slaughter his entire family. Meanwhile, Anna goes to the rock trolls and tells them she'll handle the problem with Elsa, and that they need to back off.
Elsa is alone and attempts to scale a wave on an ocean, but fails and nearly drowns. She is saved by Olaf. The two go on a long walk and have an enlightening discussion. They do a series of power tests to determine Elsa's potential weaknesses. They figure out that exposure to fire de-powers her for a short while.
