Lil' D's heart is broken and his faith is shaken when his musical idol, Sunny Bridges, and his music teacher both go missing on the same day. Joined by his music fellow student music prodigies, Lil' D decides to have a benefit concert to raise money for a new music teacher, but is unable to sell tickets. Lil' D runs into Sunny, who has quit the music business and returned to Atlanta to lay low.
Lil'D and his incredulous classmates set out to convince Sunny to play at their benefit concert. Sunny rejects this proposition, but when he hears the kids play, he realizes that though he may want out of the music business, he doesn't want out of the music. He helps the kids with their concert and then agrees to become their music teacher.
Sunny's first lesson teaches the kids to be musically and artistically free. When Principal Luna gives Sunny an overwhelming number of teacherly duties, including being responsible for the annual Peanut Pageant, Sunny instructs his students to use their newfound "artistic freedom" to do a production that's so free that it's a free-for-all.
Intent on getting into the upperclass performance of "The Kong and I", Lil' D meets and befriends another drum prodigy- who happens to be a four hundred pound gorilla. The gorilla breaks out of the zoo to be with Lil' D, who soon finds that he is welcome in the play only if he can convince his reluctant ape friend to perform the title role.
The Westley kids stumble upon Sunny's old school yearbook and mistake his years in a funk band for a tour of duty as a pirate. They find a treasure map that leads to a cave where they awaken and unleash a toxic Sloppy Joe blob. Sunny himself has a connection to the blob and he and the kids must work together to save the day.
Eddie has an amazingly exorbitant birthday party, the value of which Sunny feels Eddie's not appreciating. Sunny gives him a magical compass which will lead him to his 'real' birthday gift and Lil' D convinced Eddie to embark on a trip through Atlanta to find it. Along the way, Eddie learns a life lesson that is as good as any gift Sunny could bring him. Song: "Richer Shade of Blue"
Lil' D seeks out his own music career, but things go wrong when he meets big D (who, claims the D stands for "Dereick" but is implied to stand for "Devil") whom tricks him into selling his soul away to him.
Philly Phil's efforts to convince the kids that alien life exists send him on a mission into space. Returning almost immediately to Earth, he is captured and taken to Roswell, Georgia where he is mistaken by the government for an alien. Sunny and the kids take it upon themselves to sane Philly Phil from his captors.
Kim and Kam have to face their sibling rivalry, while Sunny encounters his rival from Eastley, who has his own class who are basically evil twins of Sunny's.
Principal Luna falls in love with the school lunch lady. Meanwhile, Madison believes Sunny to be in love with her (lunch lady), and sets them up.
Preparing for a nerve-wracking all-school performance, Philly Phil's latest invention goes haywire and turns the kids blue. After they perform well and become big hits, they attribute their stardom to their blue color and not their talent. Avoiding practice in favor of being 'stars', trouble sets in when the color fades and Philly Phil's machine breaks down after the Westley kids have learned their lesson.
Tamika gets expelled after she gets framed for a prank her popular friends did. So, she gets her revenge by making them get caught in another prank.
Sunny encounters a mad scientist named Dr. Nefario who tries to destroy him, while he also sets up a concert dedicated to his old mentor, who he believes has no faith in him, after their original Student-Teacher relation.