In a bustling Las Vegas pawn shop, a frail old man arrives with a prosthetic leg and hand, pawning a statue adorned with a medallion. He insists that the statue is his cherished good luck charm and warns the shop owner, Gupta, never to touch the medallion. However, curiosity gets the better of Gupta, and he removes it, inadvertently releasing a Leprechaun (Warwick Davis) from his stone confinement. The vengeful Leprechaun leaps onto Gupta's back, viciously biting off a piece of his ear and chastising him for his greed.
The Leprechaun, brandishing his walking stick, notices Gupta's leather shoes, removes one, and cheerfully comments on appreciating fine footwear before proceeding to bite off Gupta’s big toe. As Gupta reveals he found the medallion on the Leprechaun's petrified body, the mischievous creature, fearing his past, retreats to the basement, followed by Gupta who is soon shot in the arm by Cupid’s arrow.
Attempting to broker peace, Gupta offers half of his gold in exchange for his life. But the cunning Leprechaun discards the medallion, knowing it’s a trick. In a twist of fate, Gupta is soon strangled to death by the same phone cord he used to call for help. Meanwhile, college student Scott McCoy arrives in Las Vegas, where he encounters a damsel in distress. He gives her a ride to the Lucky Shamrock Casino, instantly smitten by Tammy.
While indulging in the casino's gambling activities, Scott loses everything at roulette and ventures to pawn his watch, only to stumble upon Gupta's lifeless body. Unbeknownst to him, Scott finds the Leprechaun's coin, granting him a single wish. The coin's lore states that one wish will come true permanently, and in a sarcastic tone, he wishes for a winning streak.
After leaving the shop, Scott finds immediate fortune at the casino, but the joy is short-lived as he becomes a target of both a robbery and the vengeful Leprechaun. After a brief struggle, he manages to throw the creature out of a hotel window, but sustains a fatal bite, causing him to adopt uncomfortable Leprechaun-like traits, including a tendency to burst into random Irish rhymes.
Meanwhile, Loretta and Fazio, fellow casino employees, along with the casino owner Mitch, pass the wish-granting coin among themselves, making wishes that spiral out of control—Mitch covets intimacy with Tammy, Loretta seeks a new body, and Fazio desires to be the world's greatest magician.
The vengeful Leprechaun survives and picks off the trespassers one by one. After Mitch's demise at the hands of a sinister robot resembling Tammy and Loretta’s disastrous consequence of inflated proportions leading to her fatal explosion, the stage is set for a climactic showdown.
Scott and Tammy's battle against the Leprechaun intensifies as he struggles against his transformation into the very creature he sought to defeat. While seeking medical help at a nearby hospital, Scott succumbs to his voracious Leprechaun urges, culminating in a face-off between him and the Leprechaun.
As the fate of the coin and their lives hangs in the balance, Tammy's intervention recalls Scott to his senses, preventing the Leprechaun from reclaiming what is rightfully his. Despite the chaos, Scott triumphs by burning the Leprechaun's gold, liberating himself from the creature's influence and returning to his human form.
Scott and Tammy finally share a kiss, leaving the chaotic casino together, having narrowly escaped the wrath of the Leprechaun and embracing a brighter future ahead.
