Derek Zoolander, Hansel, and Derek Jr. save the day and kill Mugatu. Hansel reunites with his father (Sting from the Police) and reunites with his orgy. Derek Jr. becomes a star model and scholar. Zoolander marries Valentina, has a second child with her, and opens a new school for swimsuit models.
The school Derek Zoolander (Ben Stiller) opens at the end of the first film collapses two days later, killing his wife Matilda (Christine Taylor) and scarring Hansel (Owen Wilson). It is determined that the school collapsed because Zoolander used the same materials he used to build the model of the school to build the school itself (i.e popsicle sticks and rubber cement). Child protective services then takes Zoolander's son Derek Jr. (Cyrus Arnold) away from him as he proves to be an unfit parent. Meanwhile, music stars around the world (including Justin Bieber) are being murdered, but not before taking pictures of themselves giving Zoolander "looks."
Zoolander leaves the modeling world and goes into seclusion. He is eventually found by Billy Zane (himself) who convinces Zoolander that accepting an invitation to participate in a fashion show by mega-designer Alexanya Atoz (Kristen Wiig). Zane says returning to the fashion world could help him get his son back. Billy Zane then locates Hansel living in seclusion and wearing a mask over his disfigured face. He lives in the desert with his group of orgy lovers including Kiefer Sutherland (himself). Hansel has just learned that he has impregnated every member of his orgy (even the other males) and unprepared to be a father, is convinced by Billy Zane to also re-enter the modeling world and appear at Atoz's show.
Zoolander and Hansel fly to Italy for the show and eventually patch things up. Hansel even embraces his scar caused by the school collapse (which is almost imperceptible), but confesses to Zoolander that his real problem is he never had a father and therefore doesn't know how to be one. Zoolander finds Derek Jr. in an Italian orphanage and is horrified to discover that his son is now fat, intelligent, and also hates his dad. Zoolander has also lost the ability to do "Blue Steel," his signature look. Hansel is caught cheating by his orgy lovers with the members of another orgy (including Willie Nelson, Christina Hendricks, Susan Sarandon and Ariana Grande). Things reach a head when Atoz's show is simply used as a means to embarrass the duo for being has-beens. The pair are about to call it quits when they are approached by Valentina Valencia (Penélope Cruz), head of Interpol's Fashion Division and a former swimsuit model. She convinces them to help her investigate the murders of the rocks stars.
On their journey, they learn that Hansel's dad is the rock star Sting (himself). He says that musicians (who are similar to models, but born with intelligence) are sworn to protect models. Zoolander is a direct descendant of Steve (who was the first model and lived in the Garden of Eden with Adam and Eve) and that Derek Jr. is the chosen one. It is rumored that Derek Jr.'s blood can be used to bestow eternal youth on anyone who bathes in it. This leads the team to discover that Mugatu (Will Ferrell), who has been imprisoned since the last film, has arranged for Derek Jr.'s kidnapping. They learn Mugatu's henchman, the Evil DJ (Justin Theroux) has indeed kidnapped Derek Jr. They visit the prison to interrogate Mugatu, but he manages to escape from prison while they are there. Mugatu then reunites with his girlfriend, Atoz. They plan to sacrifice Derek Jr. at her next big party.
Zoolander (who has developed feelings for Valetina that he refuses to act upon due to his loyalty to Matilda), Valentina and Hansel rush off to save Derek Jr. They find that Mugatu has arranged for his blood to be shared by the upper-echelon of fashion designers (which include Anna Wintour, Alexander Wang, Marc Jacobs, Tommy Hilfiger, Kate Moss and Valentino Garavani - all playing themselves). The trio confront Mugatu, where it is learned that Atoz is actually his hench-woman Katinka (Milla Jovovich) in disguise. Mugatu reveals that the sacrifice was all made-up and that he simply used the story to lure the fashion icons to one place where he can kill them all and be the sole ruler of fashion. He tries to stab Derek Jr., but Zoolander takes the knife to the face (leaving him a scar like Hansel). Mugatu then opens the floor to reveal a pit of lava. He intends to throw a glitter bomb into the lava to cause it to explode and kill all those inside after he escapes. Mugatu also reveals that it was in fact he who caused Zoolander's school to collapse and Derek Jr. to gain weight.
Mugatu throws the bomb. Zoolander, now over his guilt for the school's collapse and having rebuilt his relationship with Derek Jr., uses Blue Steel to stop the bomb in mid-air. His power begins to wane until Sting shows up and with his son Hansel, they also use a look to help repel the bomb. The three are still not strong enough, but Derek Jr. embraces his heritage and gives a look. Their combined powers are enough to reverse the bomb into Mugatu, which kills him (much to his assistant Todd's (Nathan Lee Graham) chagrin). Matilda's ghost reappears and gives her blessing for Zoolander to date Valentina. Hansel's orgy forgives Hansel and he accepts his impending fatherhood now that his own dad is by his side. Hansel and Zoolander also manage to heal their scars with lava.
The film ends with Zoolander and Hansel back in style. Derek Jr. is a successful academic/activist/model. Zoolander and Valentina are married and have a daughter. The pair have also opened a school for the benefit of swimsuit models (who may also be interested in one day becoming law enforcement officers).
In addition to those listed above, this film also includes cameos or small roles by (inhales deeply): Matt Lauer, Katie Couric, Jim Lehrer, Christiane Amanpour, Jane Pauley, Jerry Stiller, Joe Scarborough, Soledad O'Brien, Kyle Mooney, Susan Boyle, Fred Armisen, Andy Dick, Benedict Cumberbatch, Joe Jonas, Olivia Munn, Lewis Hamilton, Skrillex, Naomi Campbell, Katy Perry, Neil deGrasse Tyson (who becomes a model), Alexander Skarsgård, Karlie Kloss, Naomi Campbell, M.C. Hammer, John Malkovich, Alex Wagner, Dan Abrams, Mika, and Johnny Weir.
Thanks Evan B!