In 1945, Isabel Green is driven to her wits end by her hectic life while her husband fights in World War II. Between trying to keep the family farm up and running and her job in the village shop, run by the slightly mad Mrs. Docherty, she also has three boisterous children to look after, Norman, Megsie and Vincent. When her children's two wealthy cousins, Cyril and Celia, also then come to live with them and start fighting with them, Isabel requires childcare help.
When the magical Nanny McPhee arrives, the children at first do not listen and carry on fighting, which she soon puts a stop to with her magic. Meanwhile, Isabel's brother-in-law, Phil, has gambled away his half of the farm, and is being chased by two hired female assassins working for casino owner Mrs. Biggles. He desperately attempts to make Isabel sell her half of the farm, using mean and spiteful schemes to leave her no choice. The children find out one of his schemes and leads them to work together to fix it. Isabel takes the children on a picnic during which an ARP Warden, Mr. Docherty, warns them about bombs and how he imagines a pilot might accidentally release his bomb. At the end of the picnic, Uncle Phil delivers a telegram saying Isabel's husband was killed in action. Isabel and everyone else believes the telegram, but Norman says that he can "feel it in his bones" that his father is not dead. He tells this to Cyril, who at first says it is just because he is upset, but then agrees that Norman might be right, so the two boys ask Nanny McPhee to take them to the War Office in London, where Cyril and Celia's father works.
There, Nanny McPhee and the boys ask Cyril and Celia's father Lord Gray, who is very important in the War Office, what has happened to Mr. Green. At first Lord Gray sneers at Norman's disbelief at his father's death, but after Cyril blurts out that he knows his parents are getting a divorce, Lord Gray checks what has happened. While he is gone, Cyril tells Norman that he and Celia have been sent away because their parents will be splitting up, and Norman asks where Cyril and Celia will live. When Cyril replies that their parents only want to show each other off, Norman tells Cyril that he and Celia are welcome to live on the farm with the Greens. Lord Gray returns and tells Norman that his father is not dead, but is missing in action, and that there is no record of a telegram being sent to his mother. After the boys leave, Norman deduces that Uncle Phil forged the telegram.
While the boys are at the War Office, Megsie, Celia and Vincent try to stop Isabel from signing the papers and selling the farm. Just as she is about to do so, a German pilot accidentally drops a huge bomb; it shakes everything but does not explode and is left sticking out of the barley field. When Nanny McPhee returns with Norman and Cyril, Norman accuses Phil of forgery, which he admits to, and Isabel handcuffs him to the stove. The children go out to watch Mr. Docherty dismantle the bomb, but he falls from the ladder. Megsie takes over, and succeeds with the help of the other children and Nanny McPhee's jackdaw, Mr. Edelweiss. After Nanny McPhee helps to harvest the barley with a little magic, saving Phil from Mrs. Biggles' hitwomen in the process, it is revealed that old Mrs. Docherty is in fact baby Agatha from the first film and that she remembers Nanny McPhee. As Nanny McPhee walks away from the now happy family, the children and Isabel chase after her, only to see Mr. Green, in army uniform with an injured arm, making his way to them. He runs to his family and they embrace.
In the mid-credits scene, Ellie, Vincent's elephant, is seen enjoying the magically operated Scratch-o-matic.
Emma Thompson as Nanny McPhee
Maggie Gyllenhaal as Isabel Green (née Carrington)
Rhys Ifans as Phil Green, Norman
Asa Butterfield as Norman Green
Lil Woods as Megsie Green
Oscar Steer as Vincent Green
Eros Vlahos as Cyril Gray
Rosie Taylor-Ritson as Celia Gray
Maggie Smith as Agatha Rose Doherty (née Brown)
Ewan McGregor as Rory Green
Ralph Fiennes as Lord Gray
Sam Kelly as Mr. Algernon Doherty
Sinead Matthews as Miss Topsey
Katy Brand as Miss Turvey
Bill Bailey as Farmer MacReadie
Nonso Anozie as Sergeant Ralph Jeffreys
Daniel Mays as Blenkinsop
Ed Stoppard as Lieutenant Addis
Toby Sedgwick as an enemy plane pilot.
released in the United States and Canada as Nanny McPhee Returns
sequel to the 2005 film Nanny McPhee
adapted from Christianna Brand's Nurse Matilda books