Three years after the events of the previous film, ex-CIA operative Frank Moses tries to lead a normal life with girlfriend Sarah Ross. He dismisses Marvin Boggs' claims that enemies are still after them; Marvin drives off and his car explodes. Although Frank is unconvinced Marvin is dead, Sarah convinces him to attend Marvin's funeral where he delivers a tearful eulogy. Government agents interrogate Frank at an FBI Yankee White facility. Corrupt agent Jack Horton and a team of private military contractors ambush the facility; he threatens to torture Sarah until Frank gives him the information he needs. Frank evades Horton, and with the help of the still living Marvin, goes on the run with Sarah.
Marvin explains he and Frank have been targeted as members of Operation Nightshade, a clandestine operation during the Cold War to smuggle a nuclear weapon into Russia. They learned that physicist Dr. Edward Bailey is the creator of the Nightshade bomb. Horton convinces international agencies that Frank and his associates are terrorists on the run. Frank's old ally Victoria notifies him that she has been contracted by MI6 to kill the fugitives. Another top contract killer, Han Cho-Bai, is also hired, seeking revenge against Frank.
Frank, Marvin, and Sarah steal Han's plane and fly to Paris to find "The Frog", with the Americans and Han in pursuit. They are met by Katja Petrokovich, a Russian secret agent with whom Frank had a relationship, who is also investigating Nightshade. They interrogate the Frog and Sarah, hoping to one-up Katja, seduces him.
The Frog gives them the key to his security box, which Katja takes after drugging Frank; Marvin, anticipating her double-cross, provided Frank with a similar key to give her. Marvin, Frank, and Sarah search the box themselves and find documents indicating that Bailey is alive, having been held for thirty-two years in a maximum security asylum for the criminally insane in London. Victoria, alerted by Marvin, ambushes the trio, but helps fake their deaths and infiltrate the asylum. They find the hyperactive Bailey, incapacitated by mind-fogging drugs, and bring him to Marvin's safehouse, where Bailey detoxes and remembers the location of the bomb.
In Moscow, Bailey confesses he hid the bomb in the Kremlin. There, the team locates the suitcase bomb, powered by red mercury. Katja stops them, but Frank persuades her to join their mission. They escape, but a call from Victoria, who has broken out of MI6 confinement for failing to kill him, reveals that Bailey was imprisoned because he wanted to detonate the bomb in Moscow. Holding Frank at gunpoint, the anti-Communist Bailey confirms Victoria's message, admitting he was the one who originally leaked word of Project Nightshade and made a deal to give Horton the bomb. He fatally shoots Katja, frames Frank, and leaves with the bomb. Horton reneges on their deal, intending to torture Bailey for all his secrets, but Bailey deploys a nerve gas and escapes to the Iranian embassy in London. In pursuit, Frank is attacked by Han. Reaching a standoff, Frank urges Han to join him in stopping Bailey; Han relents, and the five enact a plan to recapture the bomb.
Sarah seduces the Iranian ambassador and takes him hostage. Marvin poses as a potential defector, causing a diversion in the embassy that allows the team to enter disguised as plumbers. They learn the bomb's location, but Bailey has already triggered the timer and killed Horton (revealing that he wants revenge upon the entire 'espionage community' for their roles in locking him up and apparently killing his family). Bailey takes Sarah hostage and flees to Han's plane to escape the imminent explosion. Frank, Marvin, Victoria, and Han give chase, but Marvin's attempts to disarm the suitcase bomb cause the timer to count down even faster. Frank boards the plane and confronts Bailey with the suitcase; he forces Frank to leave with Sarah and the suitcase. However, Frank reveals that he hid the bomb aboard the plane and confronted Bailey with the empty case, and the plane explodes as it takes off, killing Bailey. Han angrily demands $30 million for his plane and $20 million for not killing Frank.
The film ends as Sarah enjoys herself on a mission in Caracas with Frank and Marvin.
