The movie follows the story of Buddy and Molly's offspring in Washington. After saying goodbye to their owners one morning, the puppies decide to play hide-and-seek when Budderball finds an ice-cream truck. Rosebud spots her brother and follows him in an attempt to help. "Hilarity" ensues when Buddha finds them both in the truck and B-Dawg and Mud-Bud end up in the truck which is shipping to outside the town of Ferntiuktuk, Alaska.
In Alaska, the Buddies meet Shasta, a young husky whose 11-year old owner is determined to win the Alaskan sled dog race. Jean George is a very mean, irritable, cantankerous man with a bad temperament, and would readily take victory away from fellow competitors and possibly also hurt them if they try to get their victory back. The puppies take a vote to help a grateful Shasta to pursue his dreams. Unfortunately, as Shasta has no parents, this puts the puppies in a predicament as there is nobody to teach them how to become snow dogs and the local population of older puppies sneers at the thought of them learning how. Luckily, they find Talon, his father's mentor, in the mountains. Although initially reluctant, Shasta manages to persuade Talon into teaching the uncanny puppies into becoming his new protégés by reminding him that "It's not the size of the dog that counts but the heart of the team".
When Shasta introduces his owner, Adam, to his new sleigh team, the child is delighted at the prospect of his dreams coming true and the team pursue vigorous training routines often to comedic effect.
Adam begins building a new sleigh with his team of hard-working puppies. Talon proudly watches as the team's efforts come to fruition and it seems as though they are cooperating as a team. The older town huskies, however, are not impressed and begin to plan their downfall. They reveal to the Buddies that Shasta's parents died when the ice beneath them shattered to dishearten them.
Back in Washington, Buddy and Molly find Budderball's toy American football on the back of the ice-cream truck and proceed to take the same route the puppies did to Alaska.
Talon calls the puppies to the mountain lake one night to view the Northern Lights before he departs telling Shasta that he knows all he needs to know and that he can become the great leader that his father was. The following morning, the puppies enter the race with Adam. After being reminded by how treacherous the race is by the sheriff, the puppies begin their trek.
Meanwhile, Buddy and Molly go looking for the puppies in Alaska where the rescue dog Bernie informs them of their participation in the race and, without further hesitation, the trio try to find the puppies. Adam's father also begins looking for his son.
The team manage to make it to the midway checkpoint without much difficulty. The sheriff finally checks his email and finds out that the puppies in his town are actually the missing puppies from Washington. The snowstorm becomes more and more dangerous as Adam's father gets snowed in and Adam's main competitor and owner of the rival snow dogs begins cheating by sabotaging the competing sleds. Adam and the team take shelter in an igloo provided by an Inuit until the storm subsides. They come head to head with their opponent, Jean George, and Adam gets injured.
Adam then recovers. Jean George's dogs, the bullies from earlier get into trouble when the ice beneath them shatters. Jean George continues and abandons his dogs while Adam and the puppies begin a rescue operation despite Shasta's fears of his parents' deaths. The puppies pull the dogs out of the icy waters and Jean George continues the race without any gratitude and abandons their rescuers.
Budderball can't believe that Jean George would abandon them, and he describes Jean George's actions as betrayal. Budderball angrily describes him as an obnoxious, dirty freak. Rosebud says that she and the rest of the Buddies must be betrayal-free, and that her team continue the race without giving up. Buddha confidently emphasizes their speed and endurance, and Budderball confidently emphasizes their strength.
Jean George's dogs realize they owe nothing to their owner and everything to Shasta and the Buddies, and so, slow down causing Jean George to lose the race. Adam is victorious and the Buddies reunite with Buddy and Molly. Jean George gives out to his dogs and they respond in kind by chasing him around the Arctic. All seven Buddies return home via airplane. They land and live happily ever after.
- Skyler Gisondo as B-Dawg
- Jimmy Bennett as Buddha
- Josh Flitter as Budderball
- Henry Hodges as Mudbud
- Liliana Mumy as Rosebud
- Tom Everett Scott as Buddy
- Molly Shannon as Molly
- Kris Kristofferson as Talon, an Alaskan Malamute
- James Belushi as Bernie, a St. Bernard dog
- Paul Rae as Phillipe
- Lothaire Bluteau as Francois
- Whoopi Goldberg as Miss Mittens, a Himalayan cat
- Christian Pikes as Henry
- John Kapelos as Jean George III
- Dylan Sprouse as Shasta, a Siberian Husky
- Tom Woodruff, Jr. as Slim Wolf (uncredited)
- This is the final appearance of Buddy and Molly to date.
- This film is alluded to one of its sequels, Santa Buddies, with Rosebud explaining that she and her brothers saying that they know how to pull a sleigh, implying they remembered what Shasta taught them.
- The first film none of the Framm family appeared.
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