As the sun sets over the serene lakeside, the Ripley family—Chet (Dan Aykroyd), his wife Connie, and their two sons, Buck and Ben—arrive at their rented cabin in Pechoggin, Wisconsin, eagerly looking forward to a peaceful summer getaway. However, their plans for relaxation quickly unravel when an unexpected visitor joins them: Kate, Connie's sister, along with her husband Roman Craig (John Candy) and their twin daughters, Mara and Cara. Roman, ostentatiously flaunting his wealth, indulges in gourmet selections like lobster, much to Chet's chagrin, who would much prefer classic hot dogs.
Amid rising tensions, Chet entertains the group with a thrilling tale about a legendary, man-eating grizzly bear that purportedly attacked him, accentuating his story by claiming he used a shotgun for self-defense, which amusingly resulted in the bear losing some of its fur. The next day, Roman's obnoxious antics escalate as he impulsively rents a speedboat, whisking Chet off on a reckless joyride across the lake. Concurrently, Buck finds himself infatuated with the local girl Cammie, but his chances at romance take a nosedive when Chet is dared by Roman to devour a colossal 96-ounce steak at a nearby diner. Buck's attempt to make amends with Cammie crumbles when she chooses to ignore him.
As the days roll on, Connie begins to notice Kate's unhappiness with her marriage, feeling trapped despite Roman's lavish lifestyle. That night, a bat unexpectedly invades their cabin, forcing an undesired collaboration between Chet and Roman as they devise a plan to oust the nuisance. The atmosphere becomes increasingly tense when Roman discloses that he overheard Chet disparaging him as a questionable businessman during a conversation with their father-in-law. Overcome with guilt, Chet offers an apology and even writes Roman a check for an astounding $25,000.
After a somewhat awkward farewell, during which Kate compliments Roman for including Chet in a business opportunity, the truth unveils itself: Roman is actually teetering on the edge of bankruptcy from poor investments and intended to utilize the money to regain stability.
As a thunderstorm looms nearby, panic sets in when Kate realizes the twins are missing. This prompts an urgent search led by Chet and Roman. They eventually discover Mara and Cara trapped at the bottom of a deserted mine shaft, but Roman's fear of enclosed spaces paralyzes him. With Chet's encouragement, Roman bravely descends to rescue his daughters, while Chet hunts for a rope to assist in their ascent.
Upon returning to the cabin, an ominous feeling suffuses Chet as he learns about the infamous "Bald-Headed Bear" that prowls in the mine, sending shivers down his spine. When the bear begins to chase him, Chet dashes back to the safety of his home, but even that proves to be insufficient as the massive creature bursts through the door, wreaking havoc in its wake. Just then, Wally arrives, shotgun in hand, while Roman desperately tries to fend off the assaulting bear. In a heroic display of courage to shield his family, Chet fires at the bear, striking its hindquarters and causing it to retreat with a painful roar.
As the chaos subsides and both families part on a surprisingly congenial note, Buck's apology is graciously accepted by Cammie, concluding their brief romantic interlude. Nevertheless, Chet's spirits plummet when he learns that Connie has invited the Craigs to stay with them as they recover from their harrowing experiences. With plans to outdo Roman already brewing in his mind, Chet is more determined than ever to beat his rival back to Chicago.
The film concludes with Chet, Connie, Roman, Kate, and Wally letting loose as they dance to the lively beat of "Land of a Thousand Dances" in a spirited bar.
In a whimsical post-credits scene, a family of raccoons, the cheeky troublemakers who spent the movie rummaging through garbage cans, gather to gossip about the happenings of the story. With playful banter, they tease about Jody's new "bald on both ends" look, alluding to her unfortunate encounter with the fearsome Bald-Headed Bear.
