John Bennett (Mark Wahlberg) has been divorced from Lori Collins for six months due to her not accepting Ted (Seth MacFarlane) again despite her wish in bringing Ted back to life. Meanwhile, Ted marries his girlfriend, Tami-Lynn (Jessica Barth). One year later, their marriage is beginning to break down so they decide to have a child. As Ted cannot have children, John agrees to help Ted find a sperm donor. They ask Sam J. Jones, but he refuses due to a low sperm count. Then they try unsuccessfully to break into Tom Brady’s house and steal his sperm. Ultimately, John offers to donate his sperm (something that Ted wanted to ask him but hesitated due to John’s divorce).
Despite Ted and John’s efforts, Tami-Lynn’s historical drug use has rendered her infertile and the couple decide to adopt. As background checks are carried out, Ted brings his legal status as a person into question. The state authorities of Massachusetts declare Ted property rather than a person, resulting in the loss of his job at a grocery store – shortly after reassuring a customer (Liam Neeson) that buying a box of Trix, as an adult, will not bring him to any harm. Furthermore, his marriage to Tami-Lynn is annulled.
John suggests that they take the state to court, and their case is assigned to a novice lawyer pro bono, Samantha Leslie Jackson (Amanda Seyfried). The three bond over their love of marijuana as they prepare to present the case.