After Edward Southmere falls off the Diplodocus while placing a secret formula called "Lotus X" onto its neck, Hnup and Quon present themselves as doctors and carry Edward away.
The Chinese agents spirit Edward to the basement of a nightclub called "The Reluctant Dragon", where Hnup maintains a karate school and holding cell. They shackle Edward to a wall and interrogate him about Lotus X, but he has suffered amnesia from the fall. Surmising that Edward passed the formula's whereabouts to the nannies, Hnup sends Quon to find them.
Later, Hettie and Emily round up several young nannies and conspire to meet at the Natural History Museum at closing time. By now, Quon and Hnup have found the two nannies and overhear Hettie's plot to rescue Edward. That night, after hiding inside a whale until the guards lock the museum, the nannies hurry to the Hall of the Dinosaurs, where Hettie assigns each one a section of the Brontosaurus to search. They find nothing, and after several hours, all of the enlisted nannies leave for their jobs, except for Susan. As Hettie, Emily, and Susan continue their search, several Chinese agents capture and take them to The Reluctant Dragon. There, Hettie recognizes Hnup as a Chinese ambassador's son, nicknamed "Panda Nose", who was once her ward. Hnup orders the three women to be locked in the cell with Edward, but after he and Quon leave, the young and attractive Susan convinces Fan Choy and several karate school students to show off their prowess by kicking and chopping away the bricks of the cell. The women escape, but Edward (still in shackles) is accidentally knocked out by a flying brick.
Hettie returns to her two young charges, Lord Richard Castleberry and his younger brother, Truscott Castleberry. Meanwhile, Susan sits at a coffee house across from The Reluctant Dragon to keep watch, and when several trucks and cars gather in front of the club, she calls Hettie. Emily runs home to get her 1920 Godfrey-Nash sidecar motorcycle, and by the time she and Hettie meet Susan at the coffee house, the Chinese caravan pulls out. Emily follows, while Hettie sneaks into the club, not realizing that the young boys, Richard and Truscott, have followed her. Edward, still shackled, tells Hettie he remembers where he hid the formula on the dinosaur. She rejoins Susan across the street as Emily returns to tell them the Chinese have gone to the Natural History Museum. There, Hnup masquerades as a Chinese embassy employee bringing in a new collection, and with the curator Sir Geoffrey Wilkins out of town, Hnup easily fools assistant curator Sir Thumley. By the time Thumley becomes aware of the ruse and calls the guards, they are overwhelmed by Chinese karate students and locked in a laundry van. The brontosaurus is placed on a flatbed truck, with its head protruding over the cab and its tail dragging behind, but while the Chinese are distracted, Hettie, Emily, and Susan steal the truck and drive away. The nannies careen through the city, shocking and frightening Londoners, including two inebriated Scots who mistake the dinosaur for the Loch Ness monster, and a big game hunter who shoots at it. With Hettie driving, the nannies escape to a rural area and hide in a forest, where they can search the bones.
The next morning, curator Sir Geoffrey returns to London and finds the museum empty except for his secretary. When newspaper reporter Haycock shows up to ask if the museum is missing a dinosaur, Sir Geoffrey takes him to the hall and discovers it gone. The newspaper headlines carry the news, and broadcasters spread the story all over the world. As the Castleberry boys return to The Reluctant Dragon to look for Hettie, Fan Choy captures and carries them to a room where Hnup is interviewing Edward. The boys tell him the museum had two dinosaurs, and perhaps he stole the wrong one. Hnup takes them to the museum, bribes his way past the guard, and finds the Lotus X formula on the remaining specimen. Happy with the completion of his mission, he allows the boys to return home. When Hettie arrives at the house soon afterward, the boys tell her Hnup found the secret formula. Fearing that Hnup no longer needs to keep Edward alive, she calls Emily and tells her to return the dinosaur to London. Meanwhile, Quon contacts Marshal Wu Chi in Peking, reports that Hnup has failed, and takes over Hnup's leadership of the spy cell. Hettie arrives at the club with the boys and several nannies. They rescue Edward and defeat the karate students with their umbrellas and sensible kicking shoes. Emily and Susan crash the truck into the club, poking the dinosaur's head through a window. During the fight, Hnup sits in a corner, drinking plum wine with Edward, and makes plans to stay in London, because Marshal Wu Chi will chop off his head if he returns to Peking. Later, when Edward displays the formula, Lotus X is nothing more than a recipe for the secret of Marshal Wu Chi's mother won ton soup.
Decades later, Sir Edward explains that he and Hnup had a comfortable life together as proprietors of England's first won ton soup company.