U.S. Navy SEAL Lieutenant Shane Wolfe is assigned to rescue Howard Plummer, a man working on a top-secret government project, from a group of Serbian rebels. Shane and his team successfully get Plummer off an enemy boat. However, while boarding the helicopter to escape, the team is attacked by the enemy. Plummer is killed, and Shane spends two months in the hospital. At the United States Naval Academy in Annapolis, Maryland Shane's commanding officer, Captain Bill Fawcett, explains that he has been assigned to escort Plummer's widow, Julie, to Zürich, where Plummer's safety deposit box has been discovered to retrieve the contents. Meanwhile, Shane has been assigned to stay at the Plummer residence in Bethesda, to search for the secret project called GHOST and look after the family's five children: Zoe, Seth, Lulu, Peter, and baby Tyler. The kids prove to be difficult to handle, even with the help of nanny Helga, who quits when one of Zoe and Seth's pranks intended for Shane goes wrong. Shane eventually begins to discover the children's problems and resolve them, gaining their trust after saving them when their house was attacked by ninjas.
Later, the school's vice principal, Duane Murney, informs Shane that Seth has cut and dyed his hair, has a Nazi armband in his locker, and has skipped every wrestling practice for a month. At home, Seth tells Shane he only joined the wrestling team because of his father. After Seth sneaks out of the house, Shane follows him to the town theater, where he learns that Seth has secretly joined an amateur production of The Sound of Music. The director quits as he believes the show will be a failure. Shane volunteers to take charge of the show, take care of the house, give Zoe driving lessons in the family minivan and teach Lulu and her fellow Firefly Scouts martial arts to defend themselves against rival boy scouts.
As Seth quits the wrestling team, Shane challenges Murney to a wrestling match in front of the entire school, which he easily wins despite Murney's show of bluster. The Firefly Scouts uses the skill Shane taught to beat the rival boy scouts. Zoe and Shane share stories of their fathers, both of whom died in similar circumstances. They are interrupted by a phone call from Julie, who has figured out the password "My Angel", retrieved a two-prong key from the box and is on her way home. The kids immediately plan a "Welcome Home" party. That evening, Shane discovers a secret vault underneath the garage, which requires exactly the type of key that Julie and Bill retrieved to open. When Bill and Julie arrive home, he and Shane go to the garage, where Shane says he is rethinking his career. Two armed ninjas arrive and pull off their masks, revealing themselves as the Chuns - the Plummers' North Korean neighbors. Suddenly, Bill knocks out Shane, revealing himself to be a double agent. Mr. Chun binds, gags, and guards the children while Bill and Mrs. Chun take Julie down to the vault. They open the door, but a dangerous security system prevents them from proceeding.
The children escape and awake Shane, who sends the kids to get the police while he goes to the vault to help Julie. Mr. Chun follows them in Bill's car. With Zoe at the wheel, the kids force him to crash. Shane gets past the security system using the dance Howard had used to make Peter go to sleep each night. Julie knocks out Mrs. Chun, and Shane's voice activates the final vault, knocking out Bill with the door. By then, the children have lured a large crowd of police to the house. Mr. Chun arrives and holds all of them at gunpoint. Shane notices the school principal and his love interest Claire Fletcher right behind him, having followed the chase when she saw it pass by the school. Shane distracts Mr. Chun with the help of Mr. Plummer's family pet duck Gary, and Claire knocks him unconscious.
With Bill and the Chuns arrested, Shane and the Plummers say their goodbyes, and Shane and Claire kiss. At Seth's performance, it is revealed that Shane has retired from the Navy and joined the school staff as the new wrestling coach. Murney, dressed as a nun, also performs in the play, singing "Climb Ev'ry Mountain" off-key.