Malcolm finds his life as the middle brother in an eccentric family made even more difficult by his being placed in a class for gifted students at school where he reluctantly befriends another boy with a high IQ and stands up to a bully.

Malcolm sleeps over at Stevie's house and, appalled at his over-protected lifestyle, persuades him to sneak out to a strange, late-night escapade. Francis deals with hazing at military school. Reese tries to prove he's man enough to watch a scary movie.

Shenanigans abound at the fancy spot where the family's dining with the Kenarbans, and at Francis' school, where rowdy teenage girls are partying.

Malcolm, Dewey, Stevie, and Reese hide out at a traveling carnival after hours and run afoul of a determined security guard and several members of the freak show.

The family takes a vacation with the Kenarbans, sharing a houseboat. And while Steve's parents are caught in a fight, Reese and Steve socialize with some cheerleader from a nearby spirit camp, Malcolm is stuck with Hal fishing. At the military academy, Eric turns eighteen and leaves for Alaska, inspiring Francis to do something about his situation too.

Kitty returns and asks Lois for help getting Kitty's estranged husband back; Francis comes home and puts Dewey through the torturous "Brotherhood Initiation."