which implies Po can no longer be the Dragon Warrior and that he needs to find a worthy replacement. While Po is debating which candidate to support, he discovers that Zhen, a fox bandit, is attempting to take antiquated weaponry from the Jade Palace. Po manages to outwit Zhen and imprison her. He learns from a group of mine workers that Tai Lung, his former foe, has made a comeback and devastated an entire quarry.Zhen discloses that Tai Lung's reappearance was concealed by a sorceress called the Chameleon, who possesses the ability to transform into any animal and imitate a variety of Kung fu moves.
Po, unaware that his anxious fathers are trailing them, sets out to defeat the Chameleon in Juniper City with Zhen's help. They come across a dubious-looking pub and drive the locals out. After arriving in Juniper City, they nearly face arrest and flee to the Den of Thieves, where they are helped by Han, the den's chief and Zhen's close friend.Po and Zhen then proceed to the Chameleon's lair till Po is apprehended. Then it is revealed that Zhen has been working for the Chameleon as a double agent. Her mission was to obtain Po's Staff of Wisdom, which may be used to enter the Spirit Realm. Po comes dangerously close to breaking free, but the Chameleon tricks him by tossing him off a cliff. He is saved from certain death by his fathers, who persuade him that change may be beneficial.
The Chameleon calls all of the deceased martial arts masters—including Tai Lung, Lord Shen, and General Kai—using the staff in an attempt to steal their kung fu.Zhen goes back to the Den of Thieves with Ping and Li in an attempt to persuade them to assist them in saving Po, but Po is unyielding in his confrontation with the Chameleon. Po tries in vain to reason with the Chameleon as they fight the Chameleon's army of Komodo Dragons. They fight, but the Chameleon transforms into a Chimera of multiple kung fu experts as Zhen steps in. Following the struggle, she transforms into Po's twin, engages in combat with him, and eventually imprisons him. Po offers Zhen the Staff of Wisdom because he believes in her, and she uses it to defeat the Chameleon.Using the staff, Po—who was merely acting trapped—defeats the Chameleon and gives back all of the stolen kung fu to its rightful owners. The owners then pay tribute to Po and leave for the Spirit Realm, taking the Chameleon with them.
To Shifu's dismay, Po selects Zhen to succeed him at the Valley of Peace. Po, who is self-assured, and the Furious Five assist Zhen in becoming the next Dragon Warrior.