The game plays similar to its predecessor and features 8 stages, although (in all stages apart from stage 8) before the chosen stage starts there is a practice segment where the player has a chance to practice a small snippet of the song with PaRappa's talking stereo player Boxy Boy.
After taking a brief lesson in 'Romantic Karate' from Chop Chop Master Onion, PaRappa and his friends get shrunken by his father's invention (because he cut corners, creating a shrink ray instead), so he helps coach them back to normal size with the help of Guru Ant.
As PaRappa tries to find an alternative meal at Beard Burgers, he learns that someone is mysteriously turning all the food in Parappa Town into noodles. When Sunny Funny serves him noodles when he and PJ are at her place to eat, PaRappa couldn't believe hard enough to eat all those noodles, prompting Sunny to call him a baby and leading him to question his maturity. The story line of PaRappa The Rapper 2 centers on PaRappa, who has recently won a hundred years supply of noodles (from a burger shop coupon) and has grown tired of eating them.