R2-D2 flies Grogu, who has chosen Djarin's chain mail, to Motto's hangar. Bane and the Pykes confront Fett, Shand, and Djarin outside the remains of the Sanctuary, where Bane reveals that the Pykes killed Fett's Tusken tribe and framed the biker gang. The other crime families betray Fett and attack his soldiers throughout Mos Espa. Fett and Djarin send Shaiz's majordomo to distract the Pykes, allowing the pair to attack the group though they are soon outnumbered. Freetown's citizens and the cyborgs arrive to save the pair, but the group are overwhelmed again by two shielded Scorpenek droids. Motto arrives with Grogu, who helps Djarin destroy one of the Scorpeneks while Fett's rancor destroys the other. Bane scares off the rancor and defeats Fett in a gun duel, but Fett kills Bane with his gaffi stick. Grogu lulls the rancor to sleep, ending its rampage. In Mos Eisley, Shand kills the Pyke boss, Shaiz, and the other crime lords. As Fett earns Mos Espa's denizens respect and admiration, Djarin and Grogu fly away in their N-1 starfighter. In a mid-credits scene Vanth heals in Fett's bacta tank with the mod artist standing nearby.

Cobb Vanth, marshal of Tatooine's Freetown (formerly Mos Pelgo), confronts and shoots Pyke spice runners. Djarin flies to a forested world to visit Grogu, and is greeted by R2-D2 and Ahsoka Tano. Tano convinces Djarin that his presence will hinder Grogu, so he returns to Tatooine after asking Tano to deliver the gift—a beskar chain mail tunic—to the youngling. Jedi Master Luke Skywalker has begun training Grogu, his first student, to use the Force. Skywalker helps the youngling remember his home, the Jedi Temple on Coruscant, where he saw many Jedi killed during Order 66. Fett and his allies discuss their manpower shortage, and Djarin travels to Freetown to enlist Vanth and his people. After Djarin leaves, the hired gun Cad Bane arrives on behalf of the Pykes to order the town to be neutral in the upcoming war. Following a standoff, Bane shoots both the marshal and his deputy. Two Pykes later bomb the Sanctuary in Mos Espa. Skywalker, bearing Djarin's gift, gives a choice to Grogu: take the chain mail and stop his training, or take Yoda's lightsaber and be trained as a Jedi.

After Din Djarin tracks and kills a bounty, he delivers the bounty's head for directions to a Mandalorian hideout. There, he finds the Armorer and Paz Vizsla, survivors of their tribe of Mandalorian warriors, who inspect the Darksaber that he won from Moff Gideon. The Armorer explains that whoever wins the Darksaber in combat can become the ruler of Mandalore, though their civilization was destroyed by the Empire. The Armorer turns Djarin's beskar spear into a gift for his former charge, Grogu. Vizsla, a descendant of the Darksaber's creator Tarre Vizsla, challenges Djarin to a duel for the saber. Djarin defeats Vizsla but reveals that he previously broke their tribe's code by removing his helmet. Rejected by the tribe, Djarin takes a commercial transport to meet Peli Motto on Tatooine, who has an old N-1 starfighter to replace his previous ship, the Razor Crest. Together, they fix and modify the starship and Djarin takes it for a test flight. Upon his return, Fennec Shand arrives and asks Djarin to assist Boba Fett in the upcoming war. He agrees, but only after he visits a friend.

In the bacta tank, Fett remembers trying to reclaim his Firespray gunship from Jabba's Palace, which was heavily guarded. When he discovered Shand dying from a gut wound, Fett took her to a Mos Eisley mod-parlor, where her life was saved with cybernetics. In return, Fett requested Shand's help to break into the palace, now ruled by Bib Fortuna. After fighting the guards and retrieving Fett's ship, Shand decided to stay with Fett. They killed the biker gang that Fett believed to have massacred his Tusken tribe, before flying to the sarlacc pit to retrieve his armor. Shand killed the attacking sarlacc with a seismic charge, though Fett did not find his armor inside. In the present, Fett emerges from the bacta tank fully healed. He witnesses Krrsantan fighting Trandoshans in the Sanctuary and hires him. At a banquet, he urges Mos Espa's other crime bosses to unite against the Pyke Syndicate, but they refuse. With the rancor's presence, Fett convinces them to remain neutral while he fights the Syndicate alone. Shand suggests that they hire reinforcements for the imminent war.

Fett is asked by water-monger Lortha Peel to punish a gang of cyborgs who are stealing his water in Mos Espa, claiming that the citizens of Tatooine do not respect Fett yet. Upon seeing that the gang has no work, Fett employs the cyborgs as enforcers and demands that Peel reduce his prices. In his bacta tank, Fett recalls seeking the toll from the Pykes on behalf of the Tusken tribe, only to find the tribe destroyed by the Nikto gang on his return. His memories are interrupted when Fett is attacked by Krrsantan. Fett, Shand, the guards, and the cyborgs fight off and capture the Wookiee. The Twins soon apologize for sending Krrsantan, claiming that Shaiz has promised Jabba's territory to another syndicate. The Twins vow to leave Tatooine and gift a rancor to Fett. After releasing Krrsantan and resolving to train the rancor, Fett goes to Mos Espa with Shand and the cyborgs to question Shaiz. They find the mayor absent but chase down his majordomo who reveals that Shaiz is working with the Pykes. Later, the Pykes begin arriving in Mos Espa and Fett decides to prepare for war.

Fett and Shand interrogate the captured assassin who claims to have been hired by Mok Shaiz, the Mayor of Mos Espa. Shaiz denies this but offers payment to Fett for capturing the assassin and suggests that they visit the Sanctuary again. Fwip informs Fett that two of Jabba's cousins, a pair of Hutts known as "The Twins", want to claim Jabba's throne for themselves. The Twins arrive with the Wookiee bounty hunter Krrsantan and try to intimidate Fett, but he refuses to submit. In the bacta tank, Fett remembers the Tuskens teaching him their style of combat and desert survival skills. After the tribe was attacked by a Pyke Syndicate spice train, Fett stole speeder bikes from a nearby Nikto gang and taught the Tuskens how to ride them. He led the tribe in a successful attack to stop the train and warned the surviving Pykes that they would have to pay a toll to enter the Tuskens' territory in the future. To be admitted into the Tusken tribe, Fett was guided by a lizard inside his head to a branch, which he turned into his gaffi stick. The tribe then held a ceremony to accept him.

Boba Fett barely escapes from the sarlacc that swallowed him and is left for dead by Jawas who steal his Mandalorian armor. He is captured by Tusken Raiders and fails to escape their camp. Five years later, Fett and Fennec Shand have taken control of Jabba's criminal empire on Tatooine. They receive tribute from local dignitaries and gain the services of two Gamorrean guards. Fett and Shand visit the Sanctuary, a cantina in Mos Espa run by Garsa Fwip, who also offers a tribute. Outside the cantina, the group is ambushed by assassins, whom they fight off. Shand captures one of the assailants after pursuing them across the rooftops. The guards take an injured Fett to the palace and place him in a bacta tank for healing. Fett remembers his time with the Tuskens: he and a Rodian prisoner were forced to dig for black melons in the desert until they were attacked by a large sand creature that killed the Rodian. Fett killed the creature, saving a Tusken child and earning the respect of the tribe.