After recuperating from Lord Hallow's death, and having added Mizu into their gang, Team Arch is now clear for active missions. SpongeBob goes to the California Department of Corrections and Rehabilitation to bail out Malcom Coleman, who had been incarcerated following a controversial incident between him and Spencer Cecil, a police captain once accused of corruption, during his first week in the San Francisco Police Department. But shortly thereafter, Hal Kingsley, a rude sergeant from SFPD, starts a fight with Malcom and gets away with it, before warning him to leave San Francisco and never return.
Meanwhile, Cecil attends a meeting at a bus yard, where an SUV collides with his car. Cecil is dragged from his car and murdered. The next morning, Detective Tim Garner, Malcom's police mentor, is discovered murdered in the same SUV, which happens to be his. The team learn about Cecil's death shortly before Whitley Gleason, Kingsley's partner, arrives at the residence to question Malcom about his possible involvement. Tai provides an alibi for Gleason, clearing the team of any suspicion, but Sakura is wondering why Malcom would be involved. A news report implicating Tim in Cecil's murder inspires the team to investigate the murder due to Malcom's acquaintance with Tim and his belief that he was unlikely to commit suicide.
Yugi questions Tim's wife, Jen, about the night of the murder, before heading to a police bar where she said Tim had been that night and meeting with his partner, Raymond Fairbanks. Fairbanks confirms Jen's story that Tim had suspected Cecil of being dirty. The team gains access to the CCTV footage from the store across the street where they observed Tim getting into a Corvette, while two others got into his SUV and followed him. SpongeBob and Malcom later visit the bus yard and discover a toothpick on the ground similar to the ones that Gleason uses. They head to Kingsley's part-time gym to ask him about the murder. Kingsley, still unimpressed about Malcom staying San Francisco, attempts to dissuade him away from the case, and denies having been to the crime scene. Later on, Kingsley publicly gives Team Arch a bad image, prompting SFPD to give them a stand down order, which they disobey by continuing the case in secret.
The team chases a Corvette similar to the one on the footage on foot, but loses sight of it. Hawk catches the license plate number of the car and traces it to "Tracer" Troy Waller, a professional hitman with an undefeated streak. Malcom reveals that his first time meeting Tracer was when he was investigating the murder of Shana Carpentier, a protest leader who was boycotting several unsolved crimes that were seemingly connected, but her case was also being left unsolved among them thanks to Cecil, leading to the controversial incident. They begin surveillance of Waller and observe him making a hand off to Gil Cuthbert, a crook who was allegedly bailed out by Gleason. They later discover an FBI team led by Agent Jeff Ward is also surveilling, prompting the two teams to work together. Malcom later questions Squeeb, an inmate during his time in the prison, which leads him to Play Town, an amusement park on the brink of bankruptcy, and the site of a future casino, but before the team could investigate, they are immediately escorted off the property.
Fed up with Team Arch, Gleason and his own crew decide to kill them to keep the casino project going. Some men attempt to kill Malcom and Mizu at a restaurant, but the team rescues them. Believing the Foundation to be unsafe, the team calls Tsubasa to find a place to stay. Meanwhile, Jen's apartment has been tossed, but she and her kids are safe as they were not home at the time. Jen calls Malcom for help, and when he shows up, she gives him a recording that Tim had mailed to her. Upon watching the recording, Malcom sees that it's a recording of secret meeting confirming that Cecil was dirty, and implicating Waller, Cuthbert, Gleason, and half of Kingsley's team. Angered, Malcom confronts Gleason and offers him the chance to turn himself in, which he declines. The team brings the evidence to Ward, who unfortunately deems it insufficient.
The team tracks down Waller and interrogates him, resulting in Waller's confession that there's a shipment of contraband coming to Play Town. SpongeBob and Malcom find the shipment, force it off the road, and take down two of the gang members inside, with the third escaping. Worried about the evidence being deemed insufficient as well, Malcom decides to hide it at their safehouse, but Tsubasa discovers having heard the neighbor's dog sniffing it out. After the team notices that Mizu is gone, Squidward receives a call from Gleason using Mizu's phone, who demands a meeting with Malcom at Play Town, threatening to kill Mizu if he doesn't bring the contraband.
The team goes to Play Town where Gleason and his gang are gathered on the park's track. SpongeBob and Malcom arrive in a truck and plow through the gang members' vehicles. Gleason flees into the race track's clubhouse and Malcom pursues him, culminating in a brawl between the two of them that results in Malcom performing a citizen's arrest, having gained flashbacks of his incident with Cecil. They pile the evidence on the infield and leave Gleason and his gang restrained nearby. The team is declared heroes, the casino project is shut down, Play Town slowly escapes bankruptcy, Tim is cleared of suspicion, Cecil and Waller are charged in his and Carpentier's murder, and Gleason and his gang are convicted and sent to prison.
The team celebrates the victory by going to a local diner, but are interrupted by Kingsley, who attempts to discredit them for disobeying a direct order from SFPD, but Ward defends them, and decides to swear them into the FBI, turning the Arch Foundation into an FBI subsidiary, much to Kingsley's dismay, prompting him to leave.
In the post-credits scene, Kingsley calls an anonymous person about Team Arch now working with the FBI, but the caller assures him that he's got "everything under control", before a sniper kills Kingsley.
