John Bennett (Mark Wahlberg) has been divorced from Lori Collins for six months. Meanwhile, his best friend Ted (Seth MacFarlane), marries his girlfriend, Tami-Lynn (Jessica Barth). One year later, with their marriage is beginning to break-down so they decide to have a child. As Ted can not have children, John agrees to help Ted find a sperm donor, They asked Sam J. Jonesbut he refuses due to a low sperm count, they try unsuccessfully to break into Tom Brady’s house and steal his sperm. Ultimately, John offers to donate his sperm.
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 Massachusettsdeclare 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.
Meanwhile, Donny (Giovanni Ribisi), Ted’s life-long stalker and would-be abductor, is now employed as a janitor at the headquarters of toy company Hasbro, in New York City. He convinces the company CEO to hire an expert attorney (John Slattery) to ensure that Ted maintains his status as property, therefore leaving him open to seizure by the firm to create more living teddy bears.
Despite Samantha’s best efforts, the court rules against Ted. Disheartened but desperate, the trio contact Patrick Meighan (Morgan Freeman), a highly respected civil rights attorney, hoping he’ll take the case and overturn the court’s decision. Driving to Manhattan to meet him, Ted crashes into a hidden marijuana patch, where Samantha and John realize their attraction for each other. The next day, the trio meet Meighan, who is sympathetic to Ted’s plight but ultimately refuses the case, as he believes he has not significantly contributed to humanity due to his juvenile slacker lifestyle.
Ted, angry at the injustice and jealous of Samantha and John’s new relationship, runs off. Donny follows him as he wanders into theNew York Comic-Con. Once inside, Donny attempts to kidnap Ted, who flees and contacts John for help. John and Samantha arrive at Comic-Con and search for Ted, arriving as Donny is about to cut him open. As they make their escape, Donny cuts the cables holding up a model of the USS Enterprise and it swings towards Ted. John pushes Ted out of the way, takes the hit, and is knocked unconscious. Ted identifies Donny and he is arrested.
At the hospital, Samantha, Ted and Tami-Lynn rejoice when John recovers. Patrick Meighan decides to take the case, telling them he has been inspired by John’s selflessness and Ted’s emotions over his fallen friend. Meighan gets the ruling overturned by demonstrating that Ted is self-aware, that he feels complex emotions, and is capable of empathy. Outside the court, Ted re-proposes to Tami-Lynn. After they are re-married, Ted and Tami-Lynn, adopting the surname of “Clubberlang”, adopt a baby boy, whom they name Apollo Creed, while John and Samantha happily pursue their own relationship.