As Andy prepares to leave for college, his loyal toys face an uncertain future. Andy decides to take Woody with him and plans to store the rest of the toys in the attic. However, through a mix-up, the toys are instead donated to Sunnyside Daycare. At Sunnyside, the toys are initially overjoyed, believing they have found a new home where they will be played with every day. Woody, who knows the truth of their intended destination, attempts to convince them to return home, but they are not swayed and Woody sets off alone.

The joy of Sunnyside quickly turns sour as the toys encounter the harsh reality of the daycare's toy hierarchy, where not all toys are treated equally. A plush bear named Lotso leads the daycare toys with an iron fist, relegating Andy's toys to the chaotic and destructive younger children. Woody learns of the danger his friends are in and encounters new allies as he embarks on a mission to return and rescue them. Unbeknownst to Woody, his friends are plotting their own escape, unwilling to suffer a lifetime of abuse and neglect under Lotso's regime.