On a Detroit, Michigan, street, undercover police officer Axel Foley persuades several criminals to purchase black market cigarettes. When police arrive, the crooks speed away in a double-trailer semi truck as Axel clings to a storage chain. After a citywide chase, officers detain Axel at gunpoint only to realize he is one of their own. Back at the police station, Inspector Todd scolds Axel for his recent act of insubordination and threatens to fire him. Returning home, Axel is surprised to find his ex-convict childhood friend, Mikey Tandino, who has broken into the apartment. After showing Axel a stack of stolen German bearer bonds, Mikey reports that he recently returned from Beverly Hills, California, where he worked as an art gallery security guard for their longtime friend, Jenny Summers. When the companions return from a pool hall, a hired killer punches Axel unconscious as his boss, Zack, shoots Mikey dead as retribution for stealing the bonds. A short time later, police arrive and Axel, now conscious, unsuccessfully appeals to Inspector Todd for permission to pursue the case. Taking matters into his own hands, Axel requests time off and drives his battered Chevrolet Nova to Beverly Hills, pretending to be on vacation. There, he checks into the overbooked Beverly Palm Hotel by insisting he is a journalist for Rolling Stone magazine. Unfazed by the $235 per night fee, Axel walks to the Hollis Benton Gallery, where Jenny Summers works for art dealer Victor Maitland. She is shocked to learn of Mikey’s murder and reports that their friend worked at Maitland’s warehouse. Sometime later, Axel gains access to the Maitland’s office, pretending to be a flower deliveryman. Unaware that Mikey’s killer, Zack, is sitting in the room, Axel tells Maitland about the murder. The art dealer feigns distress then orders his henchmen to remove Axel from the building. As they throw him through a glass wall, Axel is arrested by two Beverly Hills policemen for carrying a concealed weapon. At the police station, Sgt. Taggart and his partner, Det. Billy Rosewood, reveal they are aware that Axel is a fellow officer, but the infuriated Taggart punches him in the stomach. When Lt. Bobomil asks if Axel wishes to press charges, he refuses to betray a colleague. Bobomil mentions that Axel’s boss, Inspector Todd, has again threatened to fire the detective if he is pursuing Mikey’s murder case. Later, Jenny bails Axel out of jail and defends Maitland, who launched her successful career. As they drive away in Jenny’s Mecedes convertible, Axel notices Taggart and Rosewood trailing them. Back at his hotel, Axel orders room service for delivery to the detectives’ unmarked police car. While the officers are distracted, Axel stuffs their car tailpipe with bananas so they cannot follow Jenny’s Mercedes to Maitland’s warehouse. There, Axel takes a sample of scattered coffee grounds, witnesses the transfer of German bearer bonds, and follows deliverymen to a bonded warehouse. When he locates the suspicious Maitland crate, Axel pretends to be an irate undercover customs inspector and orders the employees to check the origin and destination of the container. Returning to the hotel, Axel climbs into the backseat of Taggart and Rosewood’s car and convinces the men to join him for a drink. Despite Taggart’s insistence on following police protocol, Axel takes the detectives to a strip club, where he notices two suspicious men in trench coats. Axel persuades Taggart to back him up then detains the men. Back at the Beverly Hills police station, Axel credits Taggart and Rosewood for the arrests, but Taggart is a stickler for honesty and confesses the truth. Lt. Bobomil is outraged and reassigns the case to another team, detectives Foster and McCabe. The next morning, the new team follows Axel to Maitland’s mansion. When the art dealer’s limousine drives away, Axel outwits the detectives by speeding through a red traffic light, then trails Maitland to the elite Harrow social club. There, Axel pretends to be Maitland’s homosexual lover, who needs to convey his recent diagnosis of “herpes simplex 10,” and the maître d’ awkwardly asks Axel to deliver the message in person. Pushing Zack into a buffet table, Axel threatens to hold Maitland accountable for Mikey’s murder and ends up back at the Beverly Hills police station, where he finally reveals the true cause for his “vacation.” He explains that Maitland is bypassing customs to smuggle foreign bonds and drugs into the U.S. Although Lt. Bobomil is intrigued by the discovery, he cannot issue a warrant without proof, and his boss, Chief Hubbard, expels Axel from Beverly Hills. As Rosewood escorts him back to the hotel, Axel reveals that a Maitland shipment is scheduled to arrive that day. He convinces Rosewood to help him procure evidence and directs the detective to Maitland’s gallery. When Axel asks Jenny for keys to the warehouse, she insists on joining the officers. Leaving Rosewood outside in the unmarked police car, Axel and Jenny creep into the storeroom and uncover bags of cocaine, packed in coffee grounds. Just then, Axel and Jenny are detained at gunpoint by Maitland’s henchmen and the art dealer soon arrives with his cronies. Admitting that he is Mikey’s killer, Zack beats Axel, and Maitland is driven away in his limousine with Jenny. Meanwhile, Rosewood observes the events and realizes Axel is in danger. Risking his career, Rosewood rescues Axel and pursues Maitland’s limousine. On the way, Rosewood radios Taggart, who orders Foster and McCabe to go to the warehouse while he follows his partner to Maitland’s estate. There, Taggart orders an end to Axel’s pursuit, but the Detroit officer and Rosewood are intent on rescuing Jenny, so Taggart joins their mission. Back at the police station, Lt. Bobomil orders other officers to the scene. Meanwhile, Axel, Taggart, and Rosewood are ambushed by machine gun-bearing security guards, but Axel breaks into the mansion, kills Zack, and is shot in the arm by Maitland. As police arrive, Maitland holds Jenny at gunpoint, but Lt. Bobomil interrupts the attack, and he and Axel shoot Maitland dead. Outside, Chief Hubbard demands Axel’s arrest, but Lt. Bobomil invents a story to explain the incident. When trustworthy Taggart backs up the account, Hubbard finally believes Lt. Bobomil’s report. Although Axel is ordered to return to Detroit, the lieutenant agrees to restore Axel’s credibility with Inspector Todd. That evening, Taggart and Rosewood arrive at the Beverly Palm Hotel to escort Axel out of town. When he realizes the police department is paying for his accommodations, Axel adds two bathrobes to the bill and gives them to his friends. Outside, Taggart agrees to stop for a drink on the way out of Beverly Hills, and Axel promises in jest that he will take them to a respectable establishment.