Troy meets Gabriella at her house, with a special picnic in her room, and tries to encourage her to accept the honor program at Stanford. She finally says that she's had a lot more practice at saying goodbye than Troy has, which confuses him, as he expects her to return for the prom and graduation ceremonies.  Gabriella sends him off, and sings "Walk Away", over a scenario showing her room being emptied and the house going for sale before she gets in her mother's car to head to Stanford.

At East High, things have gone rather badly downhill.  Ryan takes Troy through the new choreography for "Just Wanna Be With You" with Sharpay in the role, and Troy whispers that Ryan is a better dancer than Sharpay.  The set behind them crashes, and Kelsi tries to comfort Troy from the orchestra pit, saying that without Gabriella, it would've always been the Sharpay show from the beginning.  In the next scene, Troy and Chad come into the Bolton kitchen, and Troy shows his mother the suit he collected from the rental place for the prom in two days.  As if on cue, Gabriella phones, but Troy is soon heartbroken when she explains that she won't be coming back for either prom or graduation.

Chad tells Troy that "you don't take the girl from high school with you," and says that Gabriella is one step ahead of them as usual.  He says that she'll be there at Stanford, while he and Troy will be in Albuquerque, and it'll be a "whole new ball game".  But Troy says he isn't sure he wants his life to be a ball game anymore, leaving Chad perplexed.  Chad then says Troy should be with his friends for the prom, and Troy responds that he doesn't plan to miss it.

Troy tries to explain to his dad that he might want to do something different than University of Albuquerque and basketball, and ends up heading to East High.  While a lightning storm rages outside, Troy faces the specter of past glories and present expectations, moving from the locker room and the gym to the drama stage, singing the song "Scream".  When he finishes, he sees Miss Darbus sitting there.  She admits that she sent his name to Julliard, and offers an apology if she overstepped herself.  Troy says he isn't mad, but he doesn't know what to do.  Miss Darbus says that it's better to look at opportunities now instead of ten years later, and says the last one to leave should turn out the lights.

At Stanford, Gabriella comes out of a university building, only to see what looks like Troy's pickup truck in the parking lot ahead of her.  Then she hears a familiar voice from a tree saying, "I figured you'd be the last one out of the building."  It's Troy, wearing the suit he rented for their prom, and he jumps down in front of her.  He explains that for him, the prom is wherever she is, and they begin dancing to a reprise of "Can I Have This Dance?", which also seems to show them at the East High prom, taking turns waltzing with their other friends as well.

Back at East High later on, Sharpay is warming up for the musical, telling people to send Troy to practice their duet, and avoiding Jimmie, who now thinks Sharpay has a secret crush on him (Troy said that to get the younger boy to stop pestering him so much).  Jimmie proudly announces that he's wearing a special cologne, Babe Magnet, that makes Sharpay sneeze violently.  She hurries away, not noticing that Jimmie is receiving a text from Troy.  Troy has been "driving all night", but thinks he may not be back before the second act, so Jimmie will have to sing with Sharpay.  Sharpay won't let anyone tell her about Troy, and only realizes that Troy isn't there when her musical cue isn't picked up.  She has to sing it three times, with long pauses between, before Jimmie finally jumps onto the stage wearing an odd collection of things from the drama wardrobe, and her number turns into her backing away from Jimmie until his cologne overwhelms her again, and she runs offstage.  As she does, Ryan follows, and both see Troy and Gabriella rush in.  "Oh, great, save the day," she mutters, and Ryan leads the pair to their places.

Throughout the show, two representatives from Julliard continually are accessing the various performances, and both seem quite impressed when Troy finally comes in, singing to Gabriella.  Meanwhile, Sharpay stalks back to her dressing room, only to be dumbstruck when she sees Tiara wearing a royal blue dress and tiara.  The English girl says she took the job as Sharpay's assistant so she could learn the ropes of East High, and says that her humility and sweetness were all an act.  She then goes to perform "A Night to Remember" in a version like Madonna's "Material Girl" or Marilyn Monroe's "Diamonds Are a Girl's Best Friend", but Sharpay decides that if East High is going to remember one Sharpay, it ought to be the real Sharpay Evans.  She comes down from the ceiling during Tiara's number, and the two girls battle for the center of the stage and attention, but Ryan uses his stage control to sink both divas into a pit onstage.

The musical proceeds to a scene where the seniors, in caps and gowns, move forward.  Miss Darbus then announces where they will be going, including the revelations that Kelsi and Ryan have both been offered Julliard scholarships, and that Sharpay will be studying at the University of Albuquerque while also helping teach in the drama department at East High next year, which sends Tiara off in a huff.  Miss Darbus finally reaches "a Wildcat, who I believe has a decision to make."  Troy steps forward, and declares that he has chosen basketball, but also theater, and that the University of California, Berkeley, will let him pursue both.  Most of all, he has chosen to follow his heart, and chosen the school that is only 32.7 miles from where Gabriella Montez will be going to study pre-law.

Miss Darbus starts to announce where Chad will be, only to see that young Danforth has fled the stage.  Troy knows where his best friend will be, and finds Chad shooting hoops in the gym again.  Chad stops, and asks seriously whether Berkeley will play basketball against Albuquerque, and Troy grins.  "I believe we'll be kicking Redhawk butt in November," or something to that affect.  The boys start chasing each other with the basketball, until Troy's dad shouts for them to get back on the stage.

The scene changes to a graduation ceremony on a football field, where Troy is addressing the entire group, saying how one person can change everything, and how East High has encouraged them all to shake off the status quo.  The students race and form a Wildcat design before singing "High School Musical".  That scene turns back into a stage, with Chad, Sharpay, Troy, Gabriella, Ryan and Taylor coming forward to take bows to the audience at the musical. 

The credits run over a yearbook style collection of photos and signatures, showing the main characters against their pictures from all three films at various times before showing a collection of outtakes.  Then the winner of a contest to be "in the picture" is singing with a group of High School Musical lookalikes over the production credits, and finally the credits for the songs take over the screen for the last couple of minutes.