Axel Foley (EDDIE MURPHY) is hot on the trail of credit card fraudsters in Detroit when he hears that his former police captain, Andrew Bogomil (RONNY COX) has been gunned down in Los Angeles. After learning that Bogomil was leading the investigation into several very serious crimes, Axel becomes convinced Bogomil was on to something and heads back to California to help his friends on his old force solve the crimes.
Leaving his undercover work in Detroit in the less-than-capable hands of his goofy colleague, Detective Jeffrey Friedman (PAUL REISER), much to the chagrin of his boss, Inspector Todd (GIL HILL), Axel rounds up his old partner Rosewood (JUDGE REINHOLD) and Sergeant Taggart (JOHN ASHTON) to finish the job Bogomil started. Facing strong opposition from the new and extremely arrogant police chief, Harold Lutz (ALLEN GARFIELD), the trio follows a trail of clues that leads to some prominent Los Angeles citizens, including the owner of a swanky gun club, Maxwell Dent (JURGEN PROCHNOW).
Together with his partners in crime, including lover Karla Fry (BRIGITTE NIELSEN), Dent is running a high-stakes arms trading operation in plain sight and committing dangerous robberies to fund the plan. With a little help from Bogomil's daughter, Jan (ALICE ADAIR), Foley, Rosewood and Taggart uncover the truth and earn accolades from the Mayor, Ted Egan (ROBERT RIDGELY).