In the last class of the school year, the East High Wildcats can barely contain their excitement ("What Time Is It"). Sharpay and Ryan look forward to spending the summer at their father's Lava Springs country club. In an attempt to steal Troy away from Gabriella, Sharpay schemes to get Troy summer work. When Troy receives the call from general manager, Mr. Fulton, he accepts a job, not only for himself, but for all of the Wildcats, as well ("What Time Is It – Reprise"). At Lava Springs, Sharpay greets her friends ("Fabulous") and is about to settle in when she sees all of the Wildcats coming to work. She demands that Fulton make them want to quit. However, Troy and Gabriella convince the Wildcats to hang in there ("Work This Out"). Ryan and Sharpay plot to ruin Troy and Gabriella's break-time picnic. Meanwhile, Kelsi writes a song for Troy and the gang to sing at the Midsummer Night's Talent Show ("You Are the Music in Me"). Still scheming, Sharpay makes Troy her golf caddy and uses a college scholarship that her father controls to lure Troy into singing with her in the talent show. Having piqued his interest, Sharpay leads a makeover of Troy into a junior golf pro with membership privileges ("Fabulous – Troy's Transformation"), during which, Troy promises to sing with her. As Ryan leads a rehearsal of his and Sharpay's talent-show number ("Humuhumunukunukuapua'a"), Troy runs in, late for his rehearsal with the Wildcats. Sharpay then gives Ryan's part to Troy and reminds him of his promise to sing with her. Troy is torn.

Sharpay convinces Kelsi to rework her song and Troy to sing it with her and the Sharpettes ("You Are the Music in Me – Rock Version"). Since Sharpay's dad set Troy up to practice with the college basketball team, Troy misses the staff baseball game and leaves his friends stranded. Determined not to have her summer ruined, Gabriella recruits Ryan to replace him on the team. Chad is hesitant at first, but he and Ryan soon learn to work together ("I Don't Dance"). And Ryan agrees to help the Wildcats stage a new number for the show ("Every Day Rehearsal"). Sharpay finds out and has Fulton ban all employees from performing ("Fabulous – Sharpay's Triumph"). Gabriella confronts Sharpay, decides to leave Lava Springs and then breaks up with Troy ("Gotta Go My Own Way"). At the talent show, Troy realizes his mistakes and refuses to sing with Sharpay. Sharpay explodes, but Fulton puts her in her place. Troy apologizes to Chad and Ryan, who suggests he still sing with Sharpay as punishment. However, Sharpay learns her lesson and asks Gabriella to sing with Troy instead ("Every Day"). With everyone reunited, the Wildcats' fantastic summer can really start ("All for One")!