Frank Drebin is persuaded out of retirement to go undercover in a state prison. There he has to find out what top terrorist, Rocco, has planned for when he escapes. Adding to his problems, Frank's wife, Jane, is desperate for a baby.
Charles Dreyfus, who has finally cracked over inspector Clouseau's antics, escapes from a mental institution and launches an elaborate plan to get rid of Clouseau once and for all.