While the main characters Alex, Marty, Gloria, and Melman are still relaxing in Africa (after the events of Madagascar: Escape 2 Africa), the four penguins: Skipper (the leader of the group), Kowalski (the smartest of the group), Private (the youngest) and Rico (the craziest), have returned to New York City in Central Park Zoo. The Penguins will rule the roost at their Central Park Zoo home, doing secret missions in the heart of New York City. At times their secret missions beckon them to venture out of the zoo. Just as the team thinks it has its urban acreage under control, a new neighbor moves in next door: Julien, King of the Lemurs (who has come to New York in some way). Now the penguins must compete against him for the supreme leader of Central Park Zoo.
When the zoo closes for the Christmas holiday, the animals gather to begin work on Kidsmas, their annual holiday festivities mainly designed to delight the younger animals. Each animal is assigned a Kidsmas preparation task to perform, but Julien, desiring a different one, rearranges each animals' task.
When a camera accidentally takes a picture of one of the lemurs at the zoo, King Julien thinks that he's trapped inside of the camera. Using their detective skills, Skipper and the gang search for the lemur before the start of the next zoo tour.
Marlene, the new zoo otter, meets the penguins for the first time after being startled by a loud noise. Going underground in the sewers, Skipper leads the charge to find the source of the noise.