The game's story is a sequel to the original PlayStation 3 version. Sackboy, the main character, decides to take a holiday walkabout around the world. The player starts in Down Under, a theme based on Australia, where they meet Bruce, a helpful character who gets the player started in the game. The player climbs to the Cave of Dreams where they meet the Mystic. It is revealed that there is to be a massive carnival in Brazil, and the player needs to go around the world to find the various creator curators and get them to go to the carnival. The player goes to The Orient in China and meets the Emperor, who has a dragon's egg in his treasure room. The player retrieves it and gives it to the dragon with the Emperor's apologies. The Emperor decides to go to the carnival.
The player travels to the Genie's realm, The Bazaar, set in Persia. The monkey thief king steals the Genie lamp from its owner. The player travels through the realm to retrieve it. It is returned to the owner after the player wins in a game of "Monkey Swing." The Genie helps them travel to Golden Sands (located in Arabia) on a magic carpet where a prince is building an amusement park and needs the player to build and test its safety features. Once they have that accomplished, the prince wants to go to the carnival.
The player travels to the Alpine Mountains where Clock Hans meets them when part of the roof is destroyed. He promises to go to the carnival if the player finds his children when they are lost while he repairs the roof. The player does so and Clock Hans gives permission to use his teleportation device, and the player ends up in Tinsel Town, which is based on Hollywood. The director has the player act as a stunt-man in his movies: LittleBugPlanet and The Sewn Identity. Once the movies are tested, they are both hits and the director comes to the carnival.
Once in Brazil, the player walks throughout other creators floats and helps them with getting them working. The Director needs a photo with them, Leading Lady and Big Ron. On Clock Hans' float the player helps to fix the clock on the lower deck of the float. Prince Funubis needs to start an oil well on his float. The Genie gets stuck inside his lamp and needs sackboy to get him out. Emperor Sario needs to set some fireworks off on his float. The Mystic gives the player a final object for his float inside Big Croc. Finally, the player adds the finishing touches to their parade float, and rides throughout Brazil on it as the end credits roll.
