Eddie Murphy plays Axel Foley, a plainclothes Detroit police detective whose latest unauthorized sting operation goes sour when two uniformed officers intervene, resulting in a high-speed chase through the city that causes widespread damage. Axel's superior, Inspector Douglas Todd, reprimands him for his reckless behavior and threatens to fire him unless he changes his ways.
Axel arrives at his apartment to find it broken into by his childhood friend, Mikey Tandino. Mikey had done prison time for a car theft the pair had committed in their youth, but has since landed a job as a security guard in Beverly Hills thanks to mutual friend Jenny Summers. Mikey reveals he has some German bearer bonds but does not explain how he obtained them. Returning to the apartment after going to a bar, Axel and Mikey are taken by surprise by two men, Zack and Casey, who knock Axel unconscious, confront Mikey about the bonds, and murder him.
Inspector Todd refuses to assign Axel to Mikey's murder investigation and Axel travels to Beverly Hills to solve the crime himself. Jenny learns about Mikey's ties to Victor Maitland, owner of the art gallery that employs her. Axel goes in disguise to Maitland's office to question him about Mikey, but is ejected by Maitland's bodyguards and arrested. Beverly Hills Police Department Lieutenant Andrew Bogomil assigns Sergeant John Taggart and Detective Billy Rosewood to follow Axel, who humiliates them by disabling their car's exhaust with a banana. Rosewood and Taggart's dislike of Axel changes to mutual respect when they co-operatively foil a robbery at a striptease bar.
Axel infiltrates one of Maitland's warehouses, where he finds evidence of drug smuggling and is arrested after a scuffle with Zack at Maitland's country club. Beverly Hills Police Chief Hubbard, who has learned of Axel's private investigation, orders him escorted out of town. Axel convinces Billy to take him and Jenny to the warehouse, where he expects another shipment to arrive. Axel and Jenny break in and discover several bags of cocaine but are discovered by Maitland, Zack and Casey. Maitland takes Jenny and orders Axel killed before admitting to Mikey's murder. Billy rescues Axel after a brief gunfight during which he kills Casey.
To rescue Jenny, Taggart tracks Axel and Billy to Maitland's estate where they wipe out four of Maitland's men, including Zack. Axel kills Maitland with Bogomil's help. Bogomil fabricates an explanation for their unauthorized actions and agrees to smooth matters over with Inspector Todd, after Axel threatens to stay in Beverly Hills as a private investigator if Detroit fires him.
Taggart and Billy pay Axel's hotel bill for him and they agree to a farewell drink together.
