Charles Dreyfus, former Chief Inspector of the Surete, has been committed to a mental institution due to his obsession with getting rid of Inspector Clouseau. However, he manages to escape and hatches a diabolical plan to eliminate his nemesis.
Dreyfus manages to obtain a vast fortune and sets up his own criminal organization. He kidnaps a renowned scientist and blackmails him into creating a doomsday weapon that can destroy the world. Dreyfus then demands the US government to hand Clouseau over, threatening to use the weapon if they don't comply.
Meanwhile, Clouseau is still attempting to solve various crimes and is oblivious to Dreyfus's plot. However, Dreyfus sends various assassins to eliminate him, but Clouseau manages to outsmart them all.
In the end, Dreyfus's plot is foiled as Clouseau manages to disarm the weapon and capture him. However, Dreyfus's madness reaches its peak, and he is admitted to another institution. The movie ends with Clouseau and his love interest, Simone, rekindling their relationship.