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Peter makes up a story about why he doesn't have his homework and the teacher doesn't buy it and sends him to the principal's office. At home, Peter is anxious to enter Jumanji which they do with the clue, "As this becomes more of a pest, the right path is in truth the best." The two arrive at nighttime and find an egg which falls from a tree and hatches into a small creature. Peter goes to touch it, but is interrupted by Alan who scares it away. The three end up having to hide from Van Pelt and Peter ends up hiding with the creature which steals some candy from him and causes enough noise to draw attention, but the two manage to evade Van Pelt and Alan and Judy distract and confuse him, causing him to leave. Peter keeps the creature in his backpack and they get chased off a cliff by a giant mosquito and as they took the right path, it seems to solve their clue and takes Judy, Peter and even Alan home. Because of this and the fact that there seem to be no consequences, Judy comes to believe that perhaps the clues repeat and their clue was Alan's original one. Alan finds his old bike in the attic and takes off, but the creature Peter found is still in his backpack and starts growing every time he lies and becomes scary instead of cute. It takes off with Judy on its back and Peter following while Alan arrives home. Aunt Nora shows up as well and doesn't seem to remember him from her adventures in Jumanji and decides to call the police but Alan steals her car and takes off. Meanwhile, Judy finally gets off the creature when going through a car wash throws her into a pile of tires and Peter catches up to her. After Peter lies a couple more times, the creature grows even bigger and spits out another creature which grows to that size also. Peter and Judy get trapped, but Alan shows up and rescues them and they escape in Aunt Nora's car. Aunt Nora and Officer Bentley encounter one of the creatures and as its eating Peter's backpack, they think the kids have been eaten which enrages Nora. Alan and the kids manage to lose the other creature for a few minutes, but Peter's lying causes it to grow again and spit out yet another creature. The three split up and Judy manages to defeat one of the creatures and then she and Alan head off to find Peter. They find him and trap the creatures in the gym, but when Peter lies to Rock, they grow again to so tall they're bigger than the gym and escape. Finally Peter defeats the creatures by revealing everything he lied about causing them to shrink back to normal and be returned to Jumanji. All the damage they caused is reversed as well, but Alan is sucked back to Jumanji too and Peter and Judy promise to free him again, but for good.

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