Plot

Martin Riggs (Mel Gibson) and Roger Murtaugh (Danny Glover), LAPD, respond to a call of a bomb at the ICSI building. Riggs convinces Murtaugh to go in with him, reasoning that the Bomb Squad never arrives on time. Riggs examines the bomb and decides to cut one of the wires. They are joined (and distracted) by a stray cat. When Riggs finally cuts a wire, the timer accelerates, forcing them to run for their lives. The building explodes and collapses.

The next day, they are both busted down to patrolman, and patrolling the streets. Murtaugh is only a week away from retiring from the LAPD. Riggs notices two men impersonating armored carriers. When the real carrier arrives, one of the impersonators shoots a guard from the real carrier and gets away in his stolen armored car. While Riggs hangs on, the female driver of the real carrier follows with Murtaugh aboard. Riggs eventually tosses one of the impersonators out of the carrier (who gets away), then gets in the cab, buckles his seat belt, and forces it to brake, making the second person fly through the windshield.

The next morning, Riggs arrives at Murtaugh's house, as they are getting ready for the house to be viewed by a potential buyer. Leo Getz, their old witness protection client, is Murtaugh's real estate agent. Riggs and Murtaugh get into another argument & scare off the buyers. Murtaugh and Riggs see Murtaugh's son, Nick, talking to his best friend, Darryl, who has become a gangster. African American named Tyrone meets the foreman of the project, Jack Travis. He then calls over Smitty, who is the armored carrier impersonator that got away. Travis found out about it. He then has someone knock Smitty down and pour concrete over him, killing him as Tyrone watches. Riggs & Murtaugh head to the shooting range, where they meet some of their comrades, including Officer Edwards, who is fresh out of the Police Academy and is an incredible shot.

Riggs shows them a new bullet that is now in circulation: a pointy-tipped .357 Magnum armor-piercing bullet, called "cop killer" on the streets. The bullets were found in the gun of Billy Phelps, the armored car suspect they caught. Riggs had him moved to Interrogation so he and Murtaugh could question him. Detective Lorna Cole, Internal Affairs is taking over the Billy Phelps case. Angered by this change, they all go to Captain Ed Murphy to clear things up, and meet the head of Internal Affairs as well. They decide to have Riggs, Murtaugh and Cole work together on the case. Jack infiltrates the LAPD locker & kills Billy with a silencer.

Cole uses a covert camera to finds that Jack Travis is an AWOL cop who has turned rogue. Leo Getz recognizes Travis in the surveillance video. He says he got the man Los Angeles Kings hockey tickets. As a result, the three go to the game to apprehend him. But Jack escapes when Riggs uses the PA system to call Travis out.

During a family barbecue, Murtaugh notices a drug deal in the neighborhood. He intervenes & everyone escapes but one person whom he shoots. That turns out to be Darryl. In Cole's office, they look up information on the gun that Darryl had. It was stolen from an LAPD impound lot several months previous. The reason Internal Affairs is in on the case is because they believe Jack Travis is stealing guns and ammunition from LAPD impound and selling them on the black market. Riggs and Cole go to a suspicious address, one that Billy Phelps have called several times. Cole and Riggs then go in to find a bunch of guys loading a truck full of stolen weapons. They initiate a fight, where Cole shows extraordinary hand-to-hand combat skills. The two steal the truck. They head back to her place to dress their wounds. Things get heated, and the two end up making love. As it turns out, Tyrone was the intended buyer of the guns Riggs and Cole recovered. Jack Travis convinces him to give him another chance to get his guns and ammo.

That afternoon, Rianne (Murtaugh's girl) arrives at Riggs' beachfront mobile home. She says Murtaugh has yet to return home after killing Darryl. That night, Riggs finds Murtaugh aboard his boat, drunk. Initially Murtaugh is angry that Rianne came to Riggs, since he's always worried that Riggs would one day seduce his eldest daughter. Riggs works to snap Murtaugh out of his funk with rhetoric about how they share the same problems, and they need to stick together. Riggs reveals he "slept with somebody he shouldn't have." Murtaugh punches Riggs off the boat, assuming he meant Rianne. After pulling Murtaugh into the water with him, Riggs clears it up, revealing his liaison with Cole.

The Murtaugh family, Riggs and Cole all attend Darryl's funeral. When Murtaugh goes to express his condolences, Darryl's mother slaps him in the face. Riggs, Murtaugh and Cole then begin a series of raids, tracing the path of Darryl's gun. First, they strike one of Darryl's gang buddies. He leads them to Tyrone, who in turn directs them to one of Travis's associates, Herman Walters, where Cole once more shows her hand-to-hand combat skills, this time for Murtaugh to see. Walters gets away, but one of Travis's henchmen, Hubie, is taken into custody.

Travis, however, is on his way to the LAPD, where he takes Captain Murphy hostage and goes to LAPD's storage facility to get more guns. Riggs, Murtaugh and Cole research leads them to Mesa Verde Construction, Travis's cover operation. Leo Getz is sent off to research Mesa Verde. As Travis gets finished loading up the guns and ammo he's stealing, Cole discovers the files on the very same equipment had just been accessed and deleted. They hurry to the scene. The group discovers the guns missing, and traces them down into the subway, where a firefight ensues. Travis kills Murphy & gets away.

Riggs chases Travis and Walters, who are getting away with the guns on a truck designed to ride the subway rails. Murtaugh races in his vehicle to catch up. Riggs pursues Travis on the wrong way of a freeway, then into a section that is under construction. Travis manages to get stopped, but Riggs flies off an unfinished ramp, hanging by some cables. The cables give way, and he falls through several platforms. He's okay, despite dislocating his unstable shoulder again. Leo arrives on the scene with the location of Mesa Verde's desert construction project, Rancho Royale.

Riggs and Murtaugh head to Rancho Royale, where they are joined by Lorna Cole. Murtaugh intends to use Darryl's gun to finish off Travis. They attack the development. Riggs gets a truck to spill fuel and drives through the house frames, spilling fuel all over the place. They light the development ablaze.

Travis ends up shooting Cole. Murtaugh fights through some of Travis's men, then finds some cop killer bullets and loads up Darryl's gun with them. Riggs fights Travis, then lets pinned down as Travis tries to run him over with a backhoe. Murtaugh takes out Walters, then tosses Darryl's gun to Riggs, loaded with the cop killers. Riggs shoots through the backhoe, killing Travis. Tending to Cole, Riggs finds that she wore two bullet-proof vests. She was still badly hurt, but they prevented even worse injuries. Riggs goes with her as she is Medevac'd by helicopter from the scene. He then lectures her on how you're supposed to live "for" somebody, not "because of" them, declaring his love for her.

Murtaugh's final day of work arrives, and he is taking a bubble bath when his family comes in to celebrate his retirement. He breaks the news: he's decided not to retire after all. Leo Getz breaks in and says he's finally sold the house, but Murtaugh tells him about his decision not to retire, and Getz gets upset at the development. The movie ends with Riggs arriving and saying goodbye to Rianne as she heads to her own work. He's also started smoking again, because of a "dog biscuit problem". Murtaugh is again suspicious, but Riggs eases his fears by saying that things are getting serious between himself and Cole, who he is picking up from the hospital later that day. They already have a dog, after all.

In an post-credits scene, Riggs and Murtaugh arrive at the scene of another bomb threat. As soon as they exit their vehicle, the building explodes. They quickly get back in the vehicle and drive off like nothing happened, both cursing their bad luck.