At a quaint garage in rural England, two siblings, Jeremy Potts and Jermima Potts, stumble upon a vintage racing car that once vied in the prestigious European Grand Prix before meeting its fate in a crash back in 1909. Eager for adventure, they implore their father, the creatively challenged inventor Caractacus Potts, who is struggling to make ends meet, to acquire the relic for them. Despite numerous failed attempts to sell his wacky inventions, Caractacus's fortunes begin to change after he earns some tips from a lively song-and-dance performance at a carnival. With newfound hope, he secures the car, affectionately naming it "Chitty Chitty Bang Bang," in honor of its quirky engine sound.
In their inaugural ride, Caractacus, the children, and a wealthy lady, Truly Scrumptious, with whom they have had less-than-favorable encounters, enjoy a delightful picnic on the beach. During this outing, Caractacus enlivens their spirits with a fantastical tale about the formidable Baron Bomburst, a ruthless ruler from the imaginary land of Vulgaria, who is eager to seize Chitty Chitty Bang Bang for his own.
As their narrative unfolds, the group finds themselves evading the Baron's ominous pirates. The cunning Baron dispatches two spies to capture the car, yet they mistakenly seize Lord Scrumptious and later, Grandpa Potts instead. Much to the children and Truly's horror, Grandpa, affectionately called Bungie Potts, is whisked away on an airship en route to Vulgaria, leading to a thrilling sequence where the magical car sprouts wings and propellers to soar through the sky. Upon reaching the castle, Grandpa is ordered by the Baron to create another flying car, but cleverly feigns competence to escape execution.
The resourceful Toymaker, once an ally to the Baron, provides refuge for the Potts family and devises a plan to save the children and the townsfolk from the tyrannical rule of Bomburst. An ingenious plot is hatched to infiltrate the castle disguised as lifelike dolls for the Baron’s birthday celebration. The bold scheme unfolds with Caractacus successfully snaring the Baron while the children storm into the banquet hall, overcoming guards and dignitaries alike. In the ensuing pandemonium, the Baron, his wife, and the nefarious Child Catcher are subdued. Chitty arrives just in time, ensuring the Potts are reunited with Grandpa.
Once they secure their freedom, the Potts family and Truly bid an emotional farewell to the Toymaker and the village, soaring back to their home in England. After completing the fantastical tale, the group leaves the beach but pauses at Scrumptious Manor to drop Truly off. Caractacus brushes aside any notions of a romantic future with her, something she perceives as a strange form of snobbery. Later, the family returns to their cottage, where they are unexpectedly welcomed by Lord Scrumptious, who presents an intriguing offer to buy one of Caractacus’s inventions, a delightful confection he has renamed "Woof Sweets."
Elated at the prospect of newfound wealth, Caractacus rushes to share the news with Truly, culminating in a heartfelt kiss and her acceptance of his marriage proposal. As they drive home in their magical car, it astonishingly takes to the sky once more, this time without the need for wings, highlighting the extraordinary adventures that lie ahead.
