Team America: World Police, a paramilitary anti-terrorism force, has a home base located inside Mount Rushmore. The team comprises Lisa, a psychologist; Carson, her love interest; Sarah, an alleged psychic; Joe, a jock who is in love with Sarah; and Chris, a martial arts expert who harbors a deep mistrust of actors. The team is led by Spottswoode and a supercomputer named I.N.T.E.L.L.I.G.E.N.C.E.. Having tracked down a group of terrorists in Paris, France, the team inadvertently destroys the Eiffel Tower, the Arc de Triomphe and the Louvre during a huge gun battle, causing more destruction than the terrorists could have ever dreamed of. The team, however, regard this as a success. Carson proposes to Lisa, but a surviving terrorist guns him down. As a replacement, Spottswoode recruits Gary Johnston, a Broadway actor with college majors in Theater and World Languages. Unbeknownst to the team, North Korean dictator Kim Jong-il is supplying international terrorists with weapons of mass destruction.

Using his acting skills, Gary successfully infiltrates a terrorist group in Cairo, Egypt. The team manages to kill the terrorists and foil their plot, but the city is left in ruins. For their actions regarding Cairo, the team is criticized by the Film Actors Guild (F.A.G.), a union of liberal Hollywood actors led by Gary's favorite actor, Alec Baldwin, and also consists of Matt Damon, Liv Tyler, Samuel L. Jackson, Janeane Garofalo, George Clooney, Susan Sarandon, Ethan Hawke, Helen Hunt, Martin Sheen, Danny Glover, Sean Penn and Tim Robbins. As the team relaxes following their victory, Gary tells Lisa about his childhood: his acting talent caused his brother to be killed by gorillas. While the two express their feelings and have sex, a group of terrorists blow up the Panama Canal as retaliation for what had happened to Cairo.

The Film Actors Guild again blames Team America over the incident regarding the Panama Canal. Gary, realizing that his acting talents have once again resulted in tragedy, abandons the others. The original members depart for Derkaderkastan, but are captured by terrorists, which include the North Korean government. Filmmaker Michael Moore vengefully infiltrates the team's Mount Rushmore base and suicide bombs the area. In North Korea, Kim Jong-il hosts a peace ceremony, inviting the Film Actors Guild and all the world's political leaders. Using the ceremony as a mere distraction, Kim Jong-il plans to detonate a series of bombs throughout the world, reducing every nation to a Third World country. During a depressed state as an alcoholic, Gary finds himself reminded of his responsibility by a speech from a drunken drifter. Upon returning to Mount Rushmore, he finds the area in ruins, though Spottswoode and I.N.T.E.L.L.I.G.E.N.C.E. have survived.

After regaining Spottswoode's trust by giving him a blowjob and undergoing a one-day training course, Gary is sent to North Korea, where he uses his acting skills to free the other members. The team then engages in a violent battle with the Film Actors Guild in which most of the actors are brutally killed. After Gary uses his acting skills to save Chris's life, Chris finally confesses to Gary that he mistrusts actors because when he was 19 years old, he was raped by the cast of the musical Cats. The team then confronts Kim Jong-il. Gary goes on stage and convinces the world's leaders to unite by using the drifter's emotional speech. Kim Jong-il kills Alec Baldwin with an assault rifle, and then is kicked over a balcony by Lisa. He is impaled on a Pickelhaube and is revealed to be an alien cockroach from the planet Gyron. The cockroach then departs in a miniature spaceship, promising to return. As Gary and Lisa begin a relationship, the team reunites, preparing to combat all of the world's remaining terrorists.

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