A year after the massacre on Lake Victoria by prehistoric piranhas, an eradication campaign has left the lake uninhabitable, and the town itself has been largely abandoned as a result of the drying-up of the lake. Meanwhile, at Cross Lake, two farmers (Gary Busey and Clu Gulager) search the waters to recover the body of a dead cow. Piranha eggs that have been laid inside the cow hatch, and the farmers are killed by the swarm, but before they both die, one farmer pops out of the water, bites the head off one of the piranhas and spits it into the air before sinking back into the water.
Maddy (Danielle Panabaker), a marine biology student, returns home for the summer to the waterpark she co-owns. She finds to her horror that the other co-owner, her step-father Chet (David Koechner), plans to add an adult-themed section to the waterpark with "water-certified strippers", and re-open it as "Big Wet". At a party at the waterpark that night, Maddy encounters several old acquaintances, including her policeman ex-boyfriend Kyle (Chris Zylka) and Barry (Matt Bush), who has secretly had a crush on her since grade school. She also runs into two of her close friends, Ashley (Meagan Tandy) and Shelby (Katrina Bowden). Shelby and her boyfriend Josh (Jean-Luc Bilodeau) go skinny-dipping in the lake, where a piranha makes its way inside her vagina. Meanwhile, Ashley and her boyfriend Travis begin to have sex in their van, but Ashley accidentally trips the handbrake with her foot, causing the van to roll into the lake. Travis, handcuffed to the van during foreplay and unable to escape, is devoured while Ashley, on the roof of the van, calls for help. With no one around to hear her cries, the van sinks into the lake and she is eaten alive by the killer fish.
The next day, Maddy is consoling Shelby about their missing friends. While sitting on a jetty, they are both attacked by a swarm of piranhas. They manage to kill one, and Maddy, Kyle and Barry take it to marine expert Carl Goodman (Christopher Lloyd) to examine. He informs them that the piranhas may be moving via sewage pipes and underground rivers between lakes, attracted by chemicals involved in swimming pool cleansers that match their spawning routes. However, the wider world wouldn't listen to his theory that the fish could evolve to become terrain-viable. The trio return to the lake, where they establish that the piranhas cannot make their way into the outflow pipes connecting the lake and the waterpark. While Shelby and Josh are having sex, the piranha in Shelby's vagina bites Josh's penis, forcing him to chop the organ off with a knife. Both are hospitalized, but survive. Kyle is revealed to be corrupt and taking bribes from Chet, who is secretly pumping water from an underground river into the waterpark, lowering his costs and boosting his profits. Chet orders Kyle to keep Maddy from finding out about his nefarious plans.
"Big Wet" opens the next day. Among the first guests are Deputy Fallon (Ving Rhames), who survived his previous ordeal with the piranhas but lost his legs, and former cameraman Andrew Cunningham (Paul Scheer). While the duo attempts to overcome their fear of the water after they were attacked a year ago, David Hasselhoff also makes an appearance as a celebrity lifeguard.
Discovering the connection between the park and the underground river, Maddy attempts to shut the waterpark down, but is stopped by Chet and Kyle. The piranhas make their way to the area and attack, killing many of the lifeguards and waterpark-goers. Fallon attaches a shotgun prosthesis to his legs in order to save the visitors, while Hasselhoff, after rescuing a small boy named David (Matthew Lintz), is pleased that he has finally become a real lifeguard. In the chaos, Chet refuses to help any survivors, including Kiki (Irina Voronina), who is eaten by the fish. He reluctantly offers some cash to a young girl whose mother is dead, but then accidentally reverses over her with his golf cart. As he attempts to drive off to safety, Chet is then decapitated by a hanging cable.
Maddy instructs Barry to begin draining the pools; however, while rescuing people from the water, she becomes caught in the suction and is dragged down to the bottom of the pool. After Kyle refuses to save her because of his fear of piranhas, Barry, despite being unable to swim, leaps down and brings her to the surface, whereupon Maddy is revived. She and Barry then kiss.
Another employee, Big Dave, pours pure chlorine into the pipes, followed by a lit joint. The resulting explosion kills most of the piranhas, while Kyle is killed by a falling trident. The celebrations are cut short, however, when Maddy takes a phone call from a horrified Mr. Goodman, who informs them that the escaped piranha are evolving and are now able to move on land, to which Maddy replies that she knows. The film ends as the Piranha Queen emerges from the pool and decapitates David (the small child who Hasselhoff saved earlier), leading Hasselhoff to quip "Little ginger moron", while the surviving visitors pick up their phones and take pictures of the dead child.
In a post-credits scene, Hasselhoff is running on a beach holding a trident, which is an advertisement for a film titled Fishhunter.
Who stops Maddy's attempt to shut down the waterpark?
Chet and Kyle