Frank Drebin (Nielsen) has retired from police work and lives a basically happy life with his wife Jane (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. Additionally, Jane tries to push him into siring a child, but Frank does not have the courage to go...

Frank Drebin (Nielsen) has retired from police work and lives a basically happy life with his wife Jane (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. Additionally, Jane tries to push him into siring a child, but Frank does not have the courage to go through this yet. It comes as a blessing to him when his old friends Ed Hocken (Kennedy) and Nordberg (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 (Ward), who is currently incarcerated, has been hired by a terrorist (Papshmir, known from the first movie) to conduct a major terrorist act against the United States. An important contact, Tanya Peters (Smith), Rocco's girlfriend, proves to be a dead end, so Drebin is asked to join Dillon undercover in prison, befriend him, and then leak details of the plan to his colleagues. However, the first part of the mission - by pure accident - proves to be extremely taxing; 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, and storms out of the house.