Anne Hathaway, Julie Andrews, Héctor Elizondo, and Heather Matarazzo return to portray their characters from the first Princess Diaries film, Princess Mia Thermopolis, Queen Clarisse Renaldi, Joe (Mia's bodyguard) and Lilly Moscovitz, respectively. Garry Marshall returned to direct and Debra Martin Chase to produce the sequel.
New characters include Viscount Mabrey (John Rhys-Davies), Lord Nicholas Devereaux (Chris Pine, in his film debut) and Andrew Jacoby (Callum Blue).
The film opens with Mia Thermopolis (Anne Hathaway), Crown Princess of Genovia, graduating from Princeton University's Woodrow Wilson School. We learn that she and Michael have broken up since he went on tour with his band.
Mia, Joe (Héctor Elizondo), and Fat Louie fly to Genovia for Mia's 21st birthday and for her to take her grandmother, Clarisse Renaldi's (Julie Andrews) place as Queen of Genovia. At her birthday ball, she has to dance with all the eligible bachelors. She accidentally steps on a mysterious young man's shoe and dances with him. When Mia's tiara falls off Viscount Mabrey (John Rhys-Davies) catches it and it is revealed that he's planning to steal her royal position.
Mia overhears the meeting between Parliament and the Queen. Viscount Mabrey mentions another heir to the crown, his nephew Lord Devereaux (Chris Pine). Mia cannot be Queen unless she gets married in 30 days. Mia wants to marry for love, but agrees to an arranged marriage. Clarisse invites Lord Devereaux to stay at the palace. Mia is shocked when she sees he is the man she flirted at the ball, Lord Nicholas Devereaux, so she angrily stomps on his foot and runs off.
Mia is joined with her best friend Lily Moscovitz (Heather Matarazzo) and later they search the possible husband. Mia chooses Andrew Jacoby (Callum Blue), Duke of Kenilworth and days later they are engaged. Mabrey and Nicholas get upset with the engagement, and plot against it. Nicholas starts flirting with Mia and initially is glad that the plan was working.
Mia starts to practise firing a flaming arrow as part of the ceremonies for when she is crowned Queen, but she is useless at archery. At a garden party, Mia gets annoyed seeing Nicholas with Lady Elissa. They argue near an isolated fountain and Nicholas suddenly kisses Mia (right before they both fall into the fountain). After that Nicholas gets second thoughts about stealing the crown and Mabrey realises that Nicholas has fallen in love with Mia.
Mia is again practicing archery when Nicholas tells her that he's leaving, but he wants to meet Mia for the last time. Mia is upset, but agrees to meet him. Later Nicholas throws stones at Mia's window. Addressing her as Rapunzel, he asks her to climb down the vine. They go to the lake and dance and fall asleep. When they wake up, Mia sees a man in a boat videotaping them. Mia thinks Nicholas set her up and storms off. When she gets back home, the video has already been broadcasted on TV. She apologizes to the disappointed Andrew, but he still wants to marry her.
Mia's mom and stepdad come for the wedding with Mia's new baby step-brother, Trevor (her mother married her history teacher/guidance counselor). Meanwhile, Nicholas is debating on whether he should go to the wedding. Mabrey leaves to the wedding and Gretchen tells him that his uncle set up what happened at the lake. Nicholas leaves for the ceremony on his grandfather's penny-farthing bike, the only means of wheeled travel available (although he subsequently swaps the bike with a shepherd for his horse).
Meanwhile Mia is walking down the aisle, but runs out realizing she can't marry Andrew. Clarisse goes after her and tells her not to make the same mistake she did and give up finding love (she's obviously talking about Joe). Mia walks back inside, saying she wants to become Queen without a husband, but Mabrey says his nephew should be King. Nicholas declines the crown, Parliament votes and the law is changed. Clarisse asks Joe for his hand in marriage and they get married.
Mia successfully shoots a flaming arrow through the Coronation ring. The day of her coronation Nicholas comes in and reveals that he is in love with her, she admits it too and they share a passionate kiss. Mia is crowned Queen of Genovia in the coronation ceremony in the palace.
- Anne Hathaway as Mia Thermopolis
- Julie Andrews as Queen Clarisse Renaldi
- Héctor Elizondo as Joe
- John Rhys-Davies as Viscount Mabrey
- Heather Matarazzo as Lilly Moscovitz
- Chris Pine as Nicholas Deveraux
- Callum Blue as Andrew Jacoby
- Kathleen Marshall as Charlotte Kutaway
- Caroline Goodall as Helen Thermopolis O'Connell
- Tom Poston as Lord Palimore
- Raven-Symoné as Princess Asana
- Larry Miller as Paolo
- Shea Curry as Lady's Maid Brigitte
- Anna A. White as Lady's Maid Brigitta
- Cassie Rowell as Lady's Maid Olivia
- Jennifer Jackson as Lady's Maid Priscilla
- Erik Bragg as Security Guard Lionel
- Scott Marshall as Security Guard Shades
- Claudia Katz as Palace Housekeeper Freda
- Allan Kent as Braclet Palace Footman
- Wesley Horton as Tiara Palace Footman
- Alec Nemser as Dancing Palace Footman Felix
- Jon Ligget as Queen Clarisse's Palace Footman
- Jane Morris as Servant Girl
- Charlee Corra Disne as Princess Charlee
- Paul Vogt as Lord Crawley
- Stan Lee as Three Stooges Wedding Guest
- Aimee Adams Hall as Princess Aimee
- Abigail Breslin as Carolina, the orphan child
- Spencer Breslin as Prince Jacques
Movie to book differences
The first movie - though sporting many different characters, differences in character and overall changes - was essentially the first Princess Diaries book, with the third Princess Diaries book's ending. The second movie was completely alternate from Meg Cabot's novels. Notable changes include:
- Genovia is actually an absolute monarchy and a principality. There are no kings or queens, only princes and princesses.
- Mia's right to the throne is not, and will never be, dependent on marriage.
- In the books, Grandmere is actually a very selfish, vindictive person and tends to cause more problems for Mia than anyone else in her life.
- Mia's father, Phillipe, is alive and well.
- Michael Moscovitz did not "get famous" with his band, they actually disbanded after their high school graduation. Michael went on to Columbia University and invented an open-heart surgery robot prototype. Michael and Mia were, until the eighth book, still together, and got back together in the tenth.
- Mia's personal bodyguard is not Joe. Joe does not exist in the books. In the books, Mia's bodyguard is a Swedish ex-military commando called Lars. They are very good friends.
- Several other characters are missing from the movie, such as J.P. Reynolds-Abernathy IV (better known in the first few books as "The Guy Who Hates It When They Put Corn In The Chili" and Mia's eventual sort-of boyfriend), Tina Hakim Baba (Mia's "second best-friend"), Shameeka Taylor, Ling-Su Wong, Kenny Showalter (Mia's first boyfriend), Rocky (her baby brother, although in the movie, Mia's mom and stepdad do have a baby whose name is Trevor), and more.
- The first singing performance by Julie Andrews in seven years, following the loss of her singing voice after botched throat surgery in 1997.
- Anne Hathaway's mother and director Garry Marshall have brief appearances in the film. Hathaway's mother was the leader of the chorus singing at Mia's wedding while Marshall was the middle drummer (the one on the left) in the coronation scene.
- The jewelry worn by Anne Hathaway and Julie Andrews was all real Chopard. A guard was on set at all times. Julie Andrews says on the DVD commentary that on many days she was wearing about a million dollars worth of jewelry.
- When Queen Clarisse reacts to Princess Mia's claim to the crown being contested, the line she says ("Shut UP!") is exactly the same as the one Mia says when Mia finds out she's a princess.
- Julie Andrews's granddaughter, Hannah Schneider is in this movie, her character being called 'Dancing Princess Hannah.'
- Joseph says to Viscount Mabrey that he has "diplomatic immunities in 46 countries, including Puerto Rico." The joke is that actor Héctor Elizondo (Joseph) is a Puerto Rican.
- The Genovian motto, "Totus corpus laborat," is improper Latin. Since "corpus" is neuter, the motto, which means "the entire body works," should read: "totum corpus laborat."
- Writer and creator of The Princess Diaries series, Meg Cabot, was initially enthusiastic about the second film  but later came to dislike the sequel and repeatedly mentioned all of the liberties the movie took, in the sixth Princess Diaries book Princess in Training.
- Marvel comic book creator, Stan Lee, makes an appearance in the movie as the "Three Stooges Wedding Guest".
- At the start of the film, when Mia is explaining how her mother surprised her by marrying her teacher, the footage that's seen is from a scene that was deleted from the first film (the teacher got paint on his shirt sleeve, and in the scene that follows, he takes his shirt off just as Mia walks in after her makeover and catches him shirtless).
- After Clarisse's talk with Parliament, she speaks with Mia in the throne room. In the numerous hall of portraits of the Renaldi line, Martha Custis Washington's portrait is present.
- Genovia was filmed partially at Universal Studios in California. It was also remarked by many film critics that Genovia looked remarkably like the Disney Backlot in Burbank, California.
- Director Garry Marshall's youngest grandchild, Sam Marshall (child of Garry's son Scott) can be seen in the DVD bloopers and as the Ring Bearer in Mia's wedding, carried by his real-life father who plays "Shades" in the movie.
- During Mia's slumber party, and when Clarisse sings a song for Mia, a guard is seen dancing outside the room where the party is taking place, but in the next shot the same guard is in the back of the room standing perfectly still. (The guards are twins, according to the DVD's special features.)
- When Julie Andrews says to Mia, "I've done quite a lot of flying in my time," she is referring to her part in Mary Poppins.
- Anne Hathaway's commitment to starring in the movie meant that she could not play Christine in the 2004 movie adaptation of Phantom of the Opera.