The police must investigate a series of robberies along the old 51 bus route in the area of the city known as Wilson Heights. The mayor (Kenneth Mars) assigns Captain Harris (G.W. Bailey) and Lt. Proctor (Lance Kinsey) to the case. While on stakeout the Wilson-Heights gang, composed of Ace (Gerrit Graham), Flash (Brian Seeman), and Ox (Darwyn Swalve), manages to elude capture (Harris and Proctor were fighting amongst themselves while the robbery took place behind their back). When the squad arrives and points out the fur store that was robbed, Proctor reveals he tried to tell Harris about it, but the latter would not listen. In his office, the mayor is furious with the latest crime spree and reprimands Harris for his precinct's slow response (and for the leak in Harris's office) and Commissioner Hurst (George R. Robertson) for not being strict with the former. Despite arguing their case, he points out that because of their slow response, everyone thinks he is incompetent to do his job and many merchants are leaving town. Under threat by the governor with revocation of his job, the mayor orders Harris, Hurst and Proctor to work with Commandant Lassard (George Gaynes) to apprehend the gang. Lassard assembles a seven-man team consisting of Moses Hightower (Bubba Smith), Eugene Tackleberry (David Graf) (who has his home protected by minefield), Larvell Jones (Michael Winslow), Laverne Hooks (Marion Ramsey) (Who is writing parking tickets), Debbie Callahan (Leslie Easterbrook) (who is driving men nuts in her gym outfit), Douglas Fackler (Bruce Mahler) (who sets the entire precinct office on fire within 5 mins of his arrival), and Lassard's nephew, Nick (Matt McCoy).Meanwhile the gang strikes a bank and gets away with $190k. But they leave behind all marked money.. Lassard's men interrogate the bank employees and get sketches of the perps and also figure that they are just hired help, acting for a mastermind. After distributing fliers as to the information of the Wilson gang with little success, Nick stumbles upon a paper reporting an antique diamond heading to a museum, and gets an idea to use it as bait. However the robbers nab the diamond anyway by cutting a hole in the truck and escaping through the sewer system. Nick suspects that the leak is "one of the task force".. Nick then decides to go undercover to get information regarding a possible hideout, but Harris decides to go undercover to get a confession. Despite his fear of heights, Harris goes undercover as a window washer at a tall building and gets a confession of himself on tape after Proctor accidentally knocks him over the balcony.The robberies are committed by a group of three dimwitted criminals who do not seem to be able to do this on their own, and it is revealed they are being guided by a shadow figure known as the "Mastermind," who speaks to the three behind a wall of glass and uses a voice distortion device. He devises a plan to get the police out of the way. The gang hits a jewelry store, and Nick had the team staking out old bus route 51. They apprehend the robbers as they come out, but they manage to get away when Harris intervenes and starts squabbling with Nick for credit. Commandant Lassard and his men are later suspended after jewelry from the gang's last robbery is found in Lassard's office, pending an investigation. The team decides to clear his name by nabbing the gang and the ringleader. Accessing data files from a computer, Nick deduces that the robberies are occurring along a bus route (where a new rail link is proposed to be built, which should increase the property prices tremendously), thus intentionally lowering property values in that part of the city. They also learn that someone must be leaking information to the criminals, which is why they are always one step ahead of the police.The mastermind instructs the trio to destroy power infrastructure in the city, causing a massive blackout. During street patrol, Nick finds the sewer entry point that the gang has been using. The police academy force finds and does battle with the Wilson gang, taking down Ace, Flash, and Ox, while Nick chases the leader. A pursuit follows, which leads to Commissioner Hurst's (George Robertson) office. Though the others are fooled by the fact there are two versions of Commissioner Hurst, Nick is not fooled and is able to help them point out the real Hurst from the fake with a Pinocchio test (pulling on the suspects' noses, revealing the impostor by stretching their latex mask). With that, Hightower removes the mask and reveals the "Mastermind" as the mayor.Caught, the mayor admits that Captain Harris has been unwittingly leaking information during his daily meetings with him and how he could have made billions off the properties if it had not been for Lassard and his team. Hurst tells Hightower to take the mayor into custody with his gang. Hurst then apologizes to Lassard and reinstates him and his team, and a plaque is given to honor the officers' bravery the next day. As the movie closes, Harris is sitting in a chair when a string tying the balloon float is cut, lifting his chair and floating him up into the air as he shouts Proctor's name. As Harris floats away, it is revealed that it was Commander Lassard who actually cut the string as revenge for Harris' actions for getting him and his team off the case with his manipulation.