Plot

Frank Drebin comes out of retirement to help Police Squad infiltrate a gang of terrorists planning to detonate a bomb at the Academy Awards.

Tasting the fruit of his labor with his wife Jane Spencer (Priscilla Presley), the maladroit and now retired Police Squad Lieutenant, Frank Drebin (Leslie Nielsen), secretly dreams of getting back in action. Before long, his old partners, Ed Hocken (George Kennedy) and Nordberg (O.J. Simpson), will have to enlist the help of their loose-cannon friend, when Rocco (Fred Ward), the deranged terrorist, intends on blowing the annual Academy Awards ceremony to smithereens. Once more, Drebin goes undercover, interrogating dangerous blonde bombshells, and putting his precious, but fragile marriage in jeopardy. Are this year's Oscars doomed to disaster?—Nick Riganas

Oscar night. Who will win? Who will lose? And will someone please kick that numbskull off stage? Wait. That's no ordinary numbskull. That's Lieutenant Frank Drebin (Leslie Nielsen), crashing the ceremonies to stop a terrorist plot that could mean curtains for him, or will a simple window shade be enough?

Frank Drebin (Leslie Nielsen) is persuaded out of retirement to go undercover in a state prison. There he is to find out what top terrorist, Rocco (Fred Ward), has planned for when he escapes. Frank's wife, Jane Spencer (Priscilla Presley), is desperate for a baby, this adds to Frank's problems. A host of celebrities at the Academy Awards ceremony are humiliated by Frank as he blunders his way trying to foil Rocco.—Rob Hartill

Frank Drebin (Leslie Nielsen) has retired from Police Squad and lives a basically happy life with his wife Jane Spencer (Priscilla Presley). It remains "basically happy" because police work has been Frank's meaning of life, and he feels unhappy about not being able to legally take on criminals anymore. Frank is unfulfilled as a househusband. Frank has nightmares about police raids going wrong. The most eventful time of his day now is his visits to the grocery store and the struggle to pack a zucchini into a plastic wrap.

Additionally, Jane tries to push him into siring a child, but Frank does not have the courage to go through this yet. Jane is a lawyer, and wherever she goes, she can only see babies and wants one of her own. Frank attends marriage counseling with Jane, who complains that every time she tries to initiate sex, he gets a headache. Jane believes that Frank resents that she is a working woman.

It comes as a blessing to him when his old friends Ed Hocken (George Kennedy) and Nordberg (O.J. Simpson) come by and ask for his help in an investigation. The Police Squad has caught wind that a well-known bomber named Rocco Dillon (Fred Ward), who is currently incarcerated, has been hired by a terrorist (Pahpshmir (Raye Birk), known from the first movie) to conduct a major terrorist act against the United States.

Pahpshmir represents a group of Arabs who want to humiliate the US. Rocco is the foremost terrorist bomber inside the states. Pahpshmir visits Rocco in prison, where Rocco demands $5 million for the strike, and reveals a target that impresses Pahpshmir.

Frank remembers Rocco's girlfriend Tanya Peters from an investigation years ago and agrees to help Ed and Nordberg by visiting the clinic where Peters works. Tanya Peters (Anna Nicole Smith) works at a fertility clinic, and which is also a sperm bank. Frank visits the clinic and writes Tanya's address on a handkerchief (with a lipstick), but loses it before he can give it to Ed. Jane comes home to an exhausted Frank (who had given his sperm specimen thrice to get close to the computer which had Tanya's address on it). The counselor had told Frank and Jane to treat that evening as special, with wine and good food, to induce sex. Jane becomes frustrated both at Frank's sudden unwillingness to engage in his marital duties and the suspicion that he is doing police work again. Frank lies and swears he is having an affair, but Jane does not believe him and moves out of their house.

Drebin is asked to join Dillon undercover in prison, befriend Rocco, and then leak details of the plan to his colleagues. Frank is put in Rocco's cell under the name Nick "The Slasher" McGurk. Frank protects himself from sexual assault in prison by wearing a chastity belt. He wins Rocco's trust after protecting their escape plan from a guard (when the guard got hold of it at lunch, while Rocco was passing it to his associate) and causing a riot. Rocco and Frank escape through a tunnel in their cell and are picked up on the outside by Rocco's mother Muriel. At Rocco's hideout, Frank attempts to get information on the bombing out of Rocco and his mother.

Rocco manages to persuade his dominant and highly distrustful mother Muriel (Kathleen Freeman) to take Frank into their house. However, both are loath to tell Frank too many details right away, which is why he is forced to stay around a little longer. Frank is vary of Tanya who suspects that she has seen Frank before, but cannot remember when and where.

In the meantime, Jane joins her friend Louise (Ellen Greene) on a road trip, but in time she realizes that she really misses Frank. When she calls home and receives no reply. Jane finds the handkerchief with Tanya's address on it inside her purse. Believing Frank was being truthful about the affair, Jane decides to drive cross-country to the address to find Frank. When she arrives, she is promptly taken hostage by Rocco and his mother. Frank must quickly cover for her; he convinces the Dillons that Jane is a random stranger but that they should keep her as a hostage. Frank argues that women make the best hostages as they eat less and smell nice.

Rocco reveals his plan: the bomb is to be set off at this year's Academy Award ceremony, with the bomb hidden in the envelope with the nomination of Best Picture and triggered when the card is pulled out.

At the awarding night, Frank and Jane separate from Rocco's team and frantically begin searching for the bomb, with Frank inflicting his usual chaos on stage during the prelude show. Frank encounters Tanya backstage, and she attempts to seduce Frank as a distraction, but her shadow on the wall reveals a large penis, causing Frank to go sick and flee. However, they are unable to find the bomb before the nomination for Best Picture is begun. When Frank bursts onto the stage and awkwardly attempts to prevent the detonation of the bomb, Rocco and his mother realize what is going on and take Jane hostage, but in the process, Frank loosens an electronic sign which takes out Muriel.

Desperate, Rocco decides to detonate the bomb to follow his mother, but Frank manages to catapult him and the bomb out of the awarding hall right into Pahpshmir's private helicopter (which was circling overhead), with the bomb eliminating all hostile parties involved. Frank and Jane reaffirm their love under the applause of the awarding audience and viewers worldwide.

Nine months later, Frank and Nordberg rush into the pediatric ward to witness the birth of Frank's child. They run into the wrong room and Frank is shown an African American baby, causing him to angrily chase Nordberg. Ed comes out of another room with Jane, who is holding their real baby.