Young Mike Wazowski aspires to become a Scarer – a monster who enters the human world at night to scare children and harvests their screams for energy – after visiting Monsters, Inc., Monstropolis' most profitable scaring company, on a school field trip. Eleven years later, Mike is now a first-year scare major at Monsters University, where he meets James P. "Sulley" Sullivan.
As the semester progresses, an intense rivalry forms between Mike, who studies hard to improve himself, and Sulley, who relies only on his natural talent and begins to falter. They both attempt to join a fraternity, but only Sulley is accepted into Roar Omega Roar (ROR), the most prestigious fraternity on campus. At the semester's final exam, a fight between the two causes them to accidentally destroy Dean Abigail Hardscrabble's cherished scream canister; Hardscrabble fails them both on the spot, judging Mike not scary and citing Sulley's laziness, leading ROR to promptly expel Sulley.
Wanting to prove himself, Mike enters the university's "Scare Games" and makes a deal with Hardscrabble: she will reinstate him and his team to the scare program if they win, but Mike must leave the university if they lose. He joins a fraternity of misfits named Oozma Kappa (OK), but they are initially denied entry to the Games for being one team member short, so Sulley joins them upon seeing the competition as his only ticket to the scare program, to which Mike reluctantly agrees.
OK loses in the first challenge, but are saved from elimination when another team is disqualified for cheating. OK improves gradually due to Mike's training and intricate knowledge of scaring, enduring setbacks and humiliations by rival fraternities, and they advance through each following challenge until only they and ROR remain. Despite their progress, Sulley does not believe that Mike has the ability to ever be a true scarer. In the final round, they defeat ROR with a surprising and decisive final scare by Mike in the simulation bedroom. However, Mike discovers that Sulley had secretly rigged the machine, causing a heated fallout between the two.