Mr. Quincy Magoo (Leslie Nielsen), a wealthy canned vegetable factory owner, goes to the museum to attend a party. While there, Waldo (Matt Keeslar), Mr. Magoo's nephew, spies a woman named Stacey Sampanahoditra (Jennifer Garner), on whom he develops a crush. Later that night, jewel thieves Luanne LeSeur (Kelly Lynch) and Bob Morgan (Nick Chinlund) steal the museum's beautiful ruby "The Star of Kuristan" and escape on a boat to Austin Cloquet (Malcolm McDowell), Bob's boss.
Meanwhile, Mr. Magoo and his dog Angus go fishing in the same area as the jewel thieves' boat. Luanne picks a fight with Bob and in the scuffle, they lose the ruby which lands in Mr. Magoo's boat unbeknownst to Magoo. Bob goes after the ruby but fails by falling onto the paddle wheel of a paddle boat.
At the museum, the curator and Stacey send two agents: Gustav Anders of the CIA (Ernie Hudson) and Chuck Stupak of the FBI (Stephen Tobolowsky) to track down the ruby and spy on Mr. Magoo whom they believe stole the ruby. Stacey mentions she was invited to the opera where the Magoos go that night. Anders and Stupak also visit the opera to look for Mr. Magoo who is in the show. At the opera Mr. Magoo meets Luanne who pretends to be a magazine reporter named Prunella Pagliachi. She wishes Mr. Magoo luck at the opera, who immediately takes a liking to her. Stupak sneaks on the stage and fails to find any clue about Mr. Magoo with Mr. Magoo accidentally hitting Stupak with a big tool.
The next morning, Luanne tricks Mr. Magoo into taking her to his house with an injured ankle. Stupak finds a notebook with Luanne's fingerprints on it and realizes who Mr. Magoo is with. He and Anders go to Mr. Magoo's house where Stupak sneaks in looking for the ruby. Mr. Magoo and Luanne arrive at the house and Stupak hides from them. Bob sneaks into Mr. Magoo's house and finds the ruby. Upon being caught in the act, he steals Mr. Magoo's prized Studebaker with the Magoos and Luanne chasing after him in Magoo's Eggplant-mobile. Bob loses them and brings the ruby to Austin.
Austin plans an auction for his criminal friends from around the world and shows them the ruby. Mr. Magoo disguises himself as Ortega Peru, a thief from Brazil who never goes anywhere and joins the auction which is taking place in a communal indoor pool. However he is discovered when the fake tattoo on his chest is washed away by the water. Luanne breaks up the auction, steals the ruby, and escapes on a snow mobile away from the lair. The government arrests Austin and his friends while Mr. Magoo gives chase on an ironing board and winds up in the middle of a women's skiing competition. Waldo and Angus sneak out of the lair, catch up with Magoo, and track down the ruby.
Angus sees Luanne in disguise as an old woman and spills her purse which gives Mr. Magoo and Waldo a clue about where Luanne is going. The Magoos follow Luanne to Brazil where Waldo spies on the real Ortega (Miguel Ferrer) and his friends. Mr. Magoo steals a bride dress from Ortega's girlfriend Rosita (Monique Rusu) and is led to the wedding. Mr. Magoo steals the ruby from Ortega and finds himself being chased by Peru's men, the government agents and Luanne. Magoo then is trapped on a raft just before it goes over a waterfall but manages to invert the raft like a parachute so he can gently float to safety. He and Waldo return the ruby to the museum with the government arresting Ortega, Luanne and the people from Brazil.
Mr. Magoo and Angus go home after returning the ruby back to the museum.