Philippe Douvier (Robert Webber), a major businessman and secretly the head of the French Connection, is suspected by his New York Mafia drug trading partners of weak leadership and improperly conducting his criminal affairs. To demonstrate otherwise, Douvier's aide Guy Algo (Tony Beckley) suggests a show of force with the murder of the famous Chief Inspector Jacques Clouseau (Peter Sellers). Unfortunately for Douvier, his first attempt at bombing Clouseau fails, and the subsequent attempt by Chinese martial artist 'Mr. Chong' (an uncredited appearance by the founder of American Kenpo, Ed Parker) is thwarted when Clouseau successfully fights him off (believing him to be Clouseau's valet Cato (Burt Kwouk), who has orders to keep his employer alert with random attacks). Douvier tries again by posing as an informant to lure Clouseau into a trap, but the Chief Inspector's car and clothes are stolen by transvestite criminal Claude Russo (Sue Lloyd), who is unknowingly killed by Douvier's men instead. Subsequently, Douvier and the French public believe Clouseau is dead; as a result of this assumption, Clouseau's ex-boss, former Chief Inspector Charles Dreyfus (Herbert Lom), is restored to sanity and is released from the lunatic asylum to perform the investigation (though he was seemingly disintegrated in the previous film).
In Russo's clothes and insisting on his true identity, Clouseau is taken to the asylum himself but escapes into Dreyfus' room, who faints from the shock of seeing Clouseau alive. Clouseau manages to disguise himself as Dreyfus and is driven home by FranÃ§ois (AndrÃ© Maranne). At home, Clouseau finds Cato, who, despite having turned Clouseau's apartment into a Chinese-themed brothel, is relieved to see he survived and the two plan revenge on the sponsor of Clouseau's assassination. Meanwhile, Dreyfus is assigned to read an elegy at Clouseau's funeral by the police chief's wife, on pain of his own discharge. During his recital, Dreyfus is barely able to control his incredulity and laughter at the praise of Clouseau, but his reaction is disguised by his tears and muffled laughter. At the cemetery, Clouseau attends the burial disguised as a priest and then surreptitiously reveals himself to Dreyfus, who recognizes him, faints, and falls into the grave. Clouseau escapes.
Meanwhile, due to his unfaithfulness, Douvier's wife threatens him with divorce. Needing her respectability, Douvier tells his secretary and paramour Simone LeGree (Dyan Cannon) that their relationship is over, to which Simone reacts angrily. Fearing that she will reveal his crimes, Douvier gives orders to have Simone killed at her nightclub, but having been told by an informant (Alfie Bass) of the possibility of trouble there, Clouseau and Cato inadvertently manage to save her. At Simone's flat, Clouseau reveals his identity, prompting her to reveal that Douvier ordered Clouseau's assassination. Attacked by more hit men, Clouseau and Simone escape into a nearby flat, which coincidentally happens to be Dreyfus'. Dreyfus overhears Simone telling Clouseau of Douvier's plan to meet the New York Mafia godfather Julio Scallini (Paul Stewart) in Hong Kong, but again faints when he sees him.
After evading their pursuers, Clouseau, Cato, and Simone follow Douvier to Hong Kong in disguise, unaware that the now suspicious Dreyfus has followed them. There, Clouseau impersonates Scallini while Simone distracts the real one, but the plan goes awry when one of Scallini's men spots Douvier leaving their hotel with a stranger and Clouseau exposes his own disguise. A car chase begins, ending in a crash at the Hong Kong docks, where Dreyfus finds Clouseau, goes berserk and pursues him into a firework warehouse. Inside, Dreyfus mistakenly sets the fireworks off and the resulting explosions sow chaos among all the participants, which eventually leads to the arrests of Douvier and Scallini. Clouseau is awarded for their arrest by the President of France, and he and Simone spend an evening together.
Who faints from the shock of seeing Clouseau alive?
Dreyfus