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The film begins where ALF ended, with Gordon Shumway (otherwise known as ALF), being captured by the US Air Force's Alien Task Force (ATF) while attempting to depart Earth. ALF is detained at Edmonds Air Force Base and despite everyone's worst fears, ALF has been thriving in captivity. Acting independently, the head of ATF security plans on killing his prisoner under the guise of a beauty treatment, for which he has left a paper trail implicating his aide Learning of this, two Air Force scientists, Major Melissa Hill and Captain Rick Mullican, help ALF escape, hiding at a cheap motel. ALF's annoying behavior results in him being ordered to hide in the restroom, reminding him of when the Tanners would do the same. Unwilling to surrender his creature comforts, ALF sneaks outside and contacts one of his former guards in an attempt to arrange a supply drop, before mistakenly entering a strip club named "Kitty Kat Lounge", assuming from it's name that it is a restaurant that serves cats. Hill learns that Moyers has set up a secret auction alongside the broadcast that would reveal ALF to the world, intending to sell the alien to the highest bidder. After she refuses to participate, he imprisons her. ALF, unaware of the betrayal, revels in being the center of attention until stage fright and the increasing hostility of his host lead ALF to lock himself in the bathroom, giving the military time to shut down the broadcast. Back at Edmonds, the general gloats that ALF's escape means he will be able to convince his superiors to have the alien executed openly, his hatred being revealed as seeking payback for an alleged alien abduction that drove his mother insane. A military panel authorizes promotions for the three officers involved in taking down the General and apologizes to ALF, before declaring him an ambassador to Earth. The scene ends with ALF's usual self-aggrandizing behavior leaving the people on the panel to question whether they have made the right choice