King Julien can't sleep, so he decides to go on a milk cleanse to help, but after Todd is attacked by a horrible monster, King Julien's nightmares cause the kingdom to question him as...THE NIGHT CREATURE!
In the middle of the night, Todd has been attacked by a fierce monster. King Julien wakes up with bloodshot eyes the next morning, convinced that the attack was just a bad dream, until Maurice shows up and tells him about last night's incident. This scares the king, as he notices that the disaster is an exact match of his dream. He slaps his adviser in the face several times to check if he's still dreaming, but Maurice informs Julien what happened was real and that Todd is with Dr. S at the moment. King Julien starts crying, thinking that Todd is dead, but Maurice points out that the young lemur survived because the beast that attacked him freaked out at the sight of his mother, Tammy. Attempting to calm himself down, King Julien downs a bottle of gecko milk, explaining that Masikura has him on a "cleanse" on account of his stress. Maurice is suspicious of this at first, as he wonders what in the king has to be stressed about. He answers, "I have been through a lot lately, Momo", in a tone that indicates that what happened in the previous season is still haunting him. However, his is annoyed that the gecko milk is giving him indigestion as a side effect... but it seems to do its job, as he calms down enough to go with Maurice to save Todd from Dr. S.
Once in Dr. S's cave, King Julien asks if Mort is responsible for what happened to Todd. Mort, wearing a wig, claims he is innocent this time, and Dr. S claims that he'll know what killed Todd once he finished the autopsy. Maurice points out, once again, that Todd didn't die, which forces the doctor to take another look. Todd claims he was alright, save a sore back. His father, Butterfish, claims that his "little girl" is delusional and has to be put down. His mother, Tammy, she pointed out for the upteenth time that Todd is a boy. Dr. S picks up the lemur child to examine said sore back, finding claw marks that he couldn't identify. Clover, showing up at that moment, recognized the claw marks as those of a "night creature".
Later that day, Clover explains night creatures to King Julien and Maurice with a book telling the true story about the curse of the night creature. It shows how handsome the king's ancestor, Julien II, had been, and how hideous and dangerous he was once infected with the curse. He would wake in the middle of the night, turn into a monster, and hunt down lemurs and other creatures to eat; not even angry mobs could stop the beast. Then, Clover's grandmother, Grandma Rose—being a cage fighter, occasional babysitter, and above all else, a talented monster hunter—stopped the night creature by killing it with a golden spear and burying it in a tomb that was sealed with a heavy stone. While putting the book away, Clover states her instincts are telling her that another night creature is on the loose, and that it is up to her to live up to her family's legacy by killing it. However, she says it would be easier if she knew who the monster was and if she kept anyone else from finding out, as it might cause a panic.
Such a plan couldn't have worse timing, as King Julien's relatives have chosen this week to visit. Uncle King Julien has told King Julien's parents, Princess Julienne and Prince Barty, that their son had lost the kingdom to Koto, and spent the entire royal budget on a long war just to get it back. To that end, the prince and princess told King Julien that it was their duty to make sure things are running smoothly again, and that if they aren't, they'd have no choice but to vote his uncle back on the throne.
Upon hearing that, King Julien empties several gallons of gecko milk to ease his resulting stress before ordering Clover to find the night creature and "wack it". Once Clover leaves to carry out that order, King Julien heads to bed to get some much needed rest, however, this is disturbed by a "double nightmare", with both dreams containing a version of Todd attacking him fiercely as if getting revenge. Upon waking up for real, and checking to see if he really is awake, King Julien's realizes he turned into the new night creature and had gone savage, making several attacks at the movies and a local Mango Tango bar. The attacks were quickly reported in the Daily Mango newspaper, and Xixi made a live "broadcast" on the broken TV for "Night Creature Watch". Xixi also reported that Todd died (much to said lemur's annoyance, as he is still alive). Even Andy Fairfax is taking advantage of it, as he starts selling "night creature protection cream" and other monster-repelling objects He is also holding monster thrill shows with his partner Pancho. Clover, after having borrowed her grandmother's golden spear from a shrine, is annoyed at the con artists "making a game of all this", and tells everyone to return home as soon as possible. with a town curfew just as Julien attacks. In that same moment, Princess Julienne and Prince Barty are talking about whether or not they should leave early and give the crown to Uncle King Julien, but they decide to give their son a chance to prove himself instead. They do so by throwing a Haunted Jungle themed Masquerade Ball for him.
The next morning, Maurice rushes to his king's hut in the middle of a seasonal rainstorm only to find—to his horror- that Clover's spear is lodged in the king's hindquarters, proof that what happened last night was real and the king really is the night creature. King Julien manages to pull the spear out of his body just before Clover shows up, making her think that he "found it", after she speared the night creature and "it got away". After reclaiming her weapon, Clover states a new theory that the beast she hunted was an "Undead Zombie Night Creature" as the previous one could've come back to life to get revenge. This theory only confuses Maurice, but King Julien takes advantage of Clover's paranoid idea and sends her on a wild chase to kill it. Once Clover is gone, King Julien, believing himself to be a danger to his own people, begs Maurice to end his life. However, the royal adviser refuses on account that the king is his best friend, and convinces him that they have to find another way.
The next night is the night of the Masquerade Ball, and everyone is enjoying the cobwebs and other spooky decorations, though Uncle King Julien is freaking everybody out more then necessary when he states how much he loves a good scare. King Julien, knowing the danger that could be caused should his night creature side get out on the dance floor, decided not to show up and asks Maurice to tie him to his own bed as tightly as possible. Maurice does what is asked of him, and gives the king his gecko milk to help relax him. He vows to remain at his side no matter what. Such a promise comforts King Julien so much that he nods off almost instantly, and after a few hours, just as Maurice starts to dose off, King Julien transforms into the night creature again. He breaks free of his bondage, and almost harms Maurice, but he talks him out of it. However, just as it seems that Night Creature Julien is able to listen to reason, the sound of the music from the Masquerade Ball gets his attention and he runs off. Realizing this could be a problem, Maurice rushes off to find Clover, who is realizing that the previous night creature is still dead and is now trying to make up a new theory about who the new night creature is. Maurice points out that the "night creature" is heading for the Masquerade Ball, and Clover runs off to hunt before she can be told that it is the king.
Back in the Masquerade Ball, Prince Barty and Princess Julienne are having a great time for the event they threw for their son, despite being disgusted at Mort's cage-dancing performance, guests wearing masks that aren't made of gold, the catering tasting terrible, and worst of all, the king, being a no-show. Uncle King Julien, while comforting his brother-in-law and sister, seemed ecstatic about this, claiming he could already feel the crown back on his head and getting popcorn to watch the show. Just then, Night Creature Julien attacks the event, but an angry mob attacks, lead by Clover and Butterfish (who claimed he is getting revenge for the "death" of his "step-daughter"). Just as Night Creature Julien is cornered, he is trapped in a cage dropped on him by Mort and Princess Julienne. Clover is thrilled by this, until the princess told her off for believing in the night creature, and that there is no such thing.Prince Barty then explains, much to the shock of the entire kingdom, that this "night creature" is their son, King Julien, and that he and his mother's branch of the royal family has a severe gecko milk allergy that makes him take this "unpleasant" form. Maurice is shocked that this didn't happen sooner, as the king had been drinking gecko milk all week. Prince Barty claims that their son is lucky as he always travels with his travel scepter, which contains the antidote for this allergy—a simple peanut—in a secret compartment. Once King Julien is given his "medicine" and quickly returns to normal, he explains he was drinking gecko milk because Masikura gave it to him for his diet, but Masikura claims she'd done no such thing. Mort is accused next after that, but Mort shows some letters from "Masikura", politely asking to deliver gecko milk to the king. The soothsaying chameleon, annoyed, takes a closer look at the letters and points out the obvious fact that Uncle King Julien's name was crossed out and her name was written in place with a crayon. Wasting no time, as nobody "poisons" his son and gets away with it, Prince Barty drops a cage on his escaping brother-in-law. To make sure the punishment fits the crime, King Julien orders Mort to "milk that bad lemur" so that the family allergy could turn him into a night creature, an order that Mort carries out with pleasure. After that, Prince Barty and Princess Julienne, despite thinking their son is a "pickleheaded jollywag" at times, decide to let him keep the crown, and they all continue to enjoy the Masquerade Ball, which King Julien leads the remainder of the celebration with a new dance move he makes up called the "Night Creature".