After a fight between Craig and the neighborhood bully Deebo, rumor spreads that Deebo will be breaking out of jail soon and will come looking for Craig. As a result, Craig's father Willie decides to have him stay with his uncle Elroy and cousin Day-Day in Rancho Cucamonga.
Initially, life with his uncle and cousin seems to be ideal but trouble soon arises. In spite of his family winning the lottery, Day-Day informs Craig that his family is not rich anymore. After taxes were deducted from their winnings, all they were left with was their house and Day-Day's BMW. Because of this, Day-Day still has a job at Pinky's, a local record store.
Day-Day's pregnant ex-girlfriend D'Wana is angry about their breakup. She vandalizes his car, pepper sprays him and threatens to return with her sister, Baby D.
A family of Chicano thugs, the Joker brothers live next door and Day-Day and Craig learn about their drug dealing activities from Mrs. Ho-Kym. Craig notices their sister Karla, but Day-Day warns him to stay away from her because of the tension between them and the Joker brothers. The mailman gives Craig a notice for the house being auctioned and he goes to the record store to inform Day-Day.
As Craig arrives at the record store he sees Day-Day being harassed by customer about the terribleness the CD he brought at the store. Craig immediately gets tired of the customer and throws him out and tells Day-Day about the letter they received in the mail. As Day-Day begins to freak out, Roach answers a phone call from D'wana and Baby D threatening to enter the store and alerts him. Day-Day then runs to the door and locks it.
When D'wana and Baby D get to the door to find out it's locked they then bang on it demanding entrance. When allowed entrance by Craig D'wana instantly ask for Day-Day and when denied she pretends to be looking for a CD. Day-Day is then spotted by D'wana who said that she needed to go to the bathroom and gets chased out of the back entrance by Baby D and D'wana. The guys later makes it back into the store to relax and talk about what's been going on lately. While the fellas are inside the record store D'wana and Baby D are still outside harassing Day-Day by throwing a brick through the windshield of his BMW.
Shortly after that situation the record store owner Pinky returns and mistakes Craig for a thief attempting to rob his store. After fighting Craig, Pinky fires both Day-Day and Roach on the spot.
Having previously received a notice of unpaid taxes, Day-Day is extremely upset with Craig for getting him fired. As they think of a solution and Roach attempts to leave, he slips on his skateboard which is then intentionally run over by the Joker brothers. As they watch, they see the eldest Joker brother removing a suspicious hydraulic pump from the trunk. They decide to find out what is inside the pump, with Roach distracting Chico with a chronic hidden in a brownie.
Craig and Day-Day manage to break into the Jokersâ house and Craig discovers the hydraulic pump contains a large amount of drug money and steals some of it. Craig then goes into Karla's bedroom which impresses her and she tells Craig the whole story. The neighborhood was peaceful until her brothers got out of jail by taking over the house and are the direct cause of her parents' mental breakdown. Karla and her parents tried to avoid her brothers by saving money and moving away, hoping it would deter them to remain in jail. However, she mentions that it only encouraged Joker and their brothers to follow them everywhere they go. After hearing this, Craig is encouraged to restore peace in Rancho Cucamonga and help Karla to put her brothers back in jail.
Day-Day and Roach grow nervous about Craig's prolonged absence and attempt to find him. They knock at the door and are greeted by the three brothers who are armed with handguns and automatic rifles and take them hostage after discovering their money has been stolen. When Craig realizes that Day-Day has not returned home, he, Willie, who arrives after receiving a "message" that Craig was in trouble, and Elroy plan a rescue mission. Willie and Elroy takeout Joker's younger brothers, Lil' Joker and Baby Joker.
A fight then ensues between Craig and Joker, while Day-Day and Roach are freed by Elroy. After a scuffle in which Joker aims an automatic rifle at Craig, Day-Day and Roach, he gets knocked out from behind by Deebo, who along with Tyrone, had snuck into Willie's truck after spotting Willie at a restaurant bathroom and tricking him into thinking Craig was in trouble. Tyrone takes Joker's rifle from the unconscious Joker and gives it to Deebo so he can exact revenge on Craig. Unfortunately, Chico, Joker's dog attacks Deebo and Tyrone. The police arrive soon after and arrest Deebo, Tyrone and the Joker brothers. This gives Craig the opportunity to make off with the hydraulic pump and the cash, which does not go unnoticed by Joker as he and his brothers, along with Deebo and Tyrone are hauled away.
Craig, Day-Day and Elroy split the money, with Elroy expressing his gratitude to Craig, as Craig and Willie depart back to South Central. As Craig leaves, he spots D'wana pulling up to Day-Day's BMW, and sees Baby D get out and toss a brick through the rear window and the two speed off laughing.

Question: Why did Day-Day's neighbors have a mental breakdown?
Answer: Their sons got out of jail
Alternative answer: The Joker Brothers getting out of jail and taking over the house