Dogs and cats are secretly highly intelligent, capable of speech, and maintain spy agencies to protect the world. In Germany, a bloodhound named Rex discovers a Cocker Spaniel puppy stealing secret codes. The thief reveals herself to be Kitty Galore, a hairless Sphynx cat, in disguise. After she escapes, Rex alerts the agents that he has spotted her. At a San Francisco used car dealership, the mascot Crazy Carlito (dressed like Uncle Sam) plans to bomb the building. Police officer Shane Larson and his dog Diggs arrive on the scene. Diggs recklessly retrieves the detonator from Carlito but bites it in the process, blowing up the building. Butch and Lou, now a fully grown Beagle and the head of D.O.G. HQ, watch the incident. Lou wants to recruit Diggs as an agent, and Butch reluctantly agrees.