The play picks up where Henry IV, Part One left off. Its focus is on Prince Hal's journey toward kingship, and his ultimate rejection of Falstaff. However, unlike Part One, Hal's and Falstaff's stories are almost entirely separate, as the two characters meet only twice and very briefly. The tone of much of the play is elegiac, focusing on Falstaff's age and his closeness to death, which parallels that of the increasingly sick king.
Falstaff is still drinking and engaging in petty criminality in the London underworld. Falstaff appears, followed by a new character, a young page whom Prince Hal has assigned him as a joke. Falstaff enquires what the doctor has said about the analysis of his urine, and the page cryptically informs him that the urine is healthier than the patient. Falstaff delivers one of his most characteristic lines: "I am not only witty in myself, but the cause that wit is in other men." Falstaff promises to outfit the page in "vile apparel" (ragged clothing). He then complains of his insolvency, blaming it on "consumption of the purse." They go off, Falstaff vowing to find a wife "in the stews" (i.e., the local brothels).
The Lord Chief Justice enters, looking for Falstaff. Falstaff at first feigns deafness in order to avoid conversing with him, and when this tactic fails pretends to mistake him for someone else. As the Chief Justice attempts to question Falstaff about a recent robbery, Falstaff insists on turning the subject of the conversation to the nature of the illness afflicting the King. He then adopts the pretense of being a much younger man than the Chief Justice: "You that are old consider not the capacities of us that are young." Finally, he asks the Chief Justice for one thousand pounds to help outfit a military expedition, but is denied.
He has a relationship with Doll Tearsheet, a prostitute, who gets into a fight with Ancient Pistol, Falstaff's ensign. After Falstaff ejects Pistol, Doll asks him about the Prince. Falstaff is embarrassed when his derogatory remarks are overheard by Hal, who is present disguised as a musician. Falstaff tries to talk his way out of it, but Hal is unconvinced. When news of a second rebellion arrives, Falstaff joins the army again, and goes to the country to raise forces. There he encounters an old school friend, Justice Shallow, and they reminisce about their youthful follies. Shallow brings forward potential recruits for the loyalist army: Mouldy, Bullcalf, Feeble, Shadow and Wart, a motley collection of rustic yokels. Falstaff and his cronies accept bribes from two of them, Mouldy and Bullcalf, not to be conscripted.
In the other storyline, Hal remains an acquaintance of London lowlife and seems unsuited to kingship. His father, King Henry IV is again disappointed in the young prince because of that, despite reassurances from the court. Another rebellion is launched against Henry IV, but this time it is defeated, not by a battle, but by the duplicitous political machinations of Hal's brother, Prince John. King Henry then sickens and appears to die. Hal, seeing this, believes he is King and exits with the crown. King Henry, awakening, is devastated, thinking Hal cares only about becoming King. Hal convinces him otherwise and the old king subsequently dies contentedly.
The two story-lines meet in the final scene, in which Falstaff, having learned from Pistol that Hal is now King, travels to London in expectation of great rewards. But Hal rejects him, saying that he has now changed, and can no longer associate with such people. The London lowlifes, expecting a paradise of thieves under Hal's governance, are instead purged and imprisoned by the authorities.
At the end of the play, an epilogue thanks the audience and promises that the story will continue in a forthcoming play "with Sir John in it, and make you merry with fair Katharine of France; where, for all I know, Falstaff shall die of a sweat". In fact, Falstaff does not appear on stage in the subsequent play, Henry V, although his death is referred to. The Merry Wives of Windsor does have "Sir John in it", but cannot be the play referred to, since the passage clearly describes the forthcoming story of Henry V and his wooing of Katherine of France. Falstaff does "die of a sweat" in Henry V, but in London at the beginning of the play. His death is offstage, described by another character and he never appears. His role as a cowardly soldier looking out for himself is taken by Ancient Pistol, his braggart sidekick in Henry IV, Part 2 and Merry Wives.
The epilogue also assures the playgoer that Falstaff is not based on the anti-Catholic rebel Sir John Oldcastle, for "Oldcastle died martyr, and this is not the man." Falstaff had originally been named Oldcastle, following Shakespeare's main model, the earlier play The Famous Victories of Henry V. Shakespeare was forced to change the name after complaints from Oldcastle's descendents. While it is accepted by modern critics that the name was originally Oldcastle in Part 1, it is disputed whether or not Part 2 initially retained the name, or whether it was always "Falstaff". According to René Weis, metrical analyses of the verse passages containing Falstaff's name have been inconclusive.