-Lorna Cole is pregnant with LAPD Sgt. Martin Riggs baby; they are not married but are thinking about it. Police Sgt. Roger Murtaugh's daughter Rianne is also pregnant, and later on Riggs learns that the father of the baby is Det. Lee Butters(Chris Rock) who Rianne secretly married.
-Riggs, Murtaugh and Butters- with help from Leo who is now a PI- investigate a Chinese ship smuggling immigrants from the Chinese mainland after coming across them in a cargo hold. These people are being brought in as slave labor; In the course of the events, Murtaugh discovers a Chinese family has hidden in a dinghy along the bank of the water, and he provides shelter for them.
-Investigating it further, this leads to a Chinatown crime boss named Benny Chan(Kim Chan), aka "Uncle Benny". They are introduced to a high rnaking Triad negotiator named Wah Sing Ku(Jet Li). Benny forces the cops out of the restaurant with out info. Outside, they encounter the captain of the ship and chase him and another man. The suspect turns out to be a waiter and is freed. Later on, Ku kills the captain on a roof top by strangling him with a set of Buddhist prayer beads disguising a garrotte wire.
-Riggs and Murtaugh hire Leo to follow Uncle Benny. Hong, the leader of the Chinese family Murtaugh rescued, contacts his uncle and they come home to find Ku and his men holding Lorna and Murtaugh's family captive. The Hong family are taken away and after a brief fight, the house is set on fire. Ping, the youngest of the Hong children, frees them. Murtaugh and Riggs chase down the Triad members down a freeway, but both men are killed, in a traffic collision without giving any info on the whereabouts of the Hong family.
-Ku and the other men visit a Chinese-based holding cell being run by a corrupt Chinese general, who is holding 4 Triad overlords known as the Four Fathers, one of whom is Ku's brother and demanding a large payoff from the Triads for their release. After Riggs and Murtaugh return home, Leo informs them and Butters that Benny is seeing his dentist, and using Leo to distract the dentist, the 3 cops use nitrous oxide to extract into from Benny. Riggs accidentally reveals that Butters is Rianne's husband and the father of her baby. Because they exposed themselves to the laughing gas as well, they misunderstood the info Benny gave them, which leads to some complications
-Ku brings the Hongs to the Triad's hideout where it is revealed that the Triads plan to give the corrupt general counterfeit Chinese money for the release of the Four Fathers. The captive artist working on the printing plates is the elder uncle to Hong and agreed to do the job in exchange for his family's safe passage to the US. With the printing plates done, he and Benny are killed for exposing the operation and to protect the forgery.
-Det. Ng, who is familiar with Chinese society, contacts Murtaugh and other officers on the info Benny gave them. After Riggs picks up Ping and Lorna, the officers locate the hideout, but only find the dead and some of the counterfeit Chinese money. Det. Ng helps them piece everything together. At the meeting place between Ku and the general, Riggs, Murtaugh, Butters and the other detectives expose the counterfeit money; as a result the general kills 3 of the Four Fathers. Ku's henchman kill the general and a firefight breaks out, between the cops, the Triads and the general's private army. Butters is shot in the back while protecting Murtaugh and he kills Ku's brother while aiming for Ku. In revenge, Ku starts a major fight with Riggs and Murtaugh on a pier. Murtaugh is knocked out after impaling Ku on a piece of rebar while Riggs and Ku fall into the water. Riggs fights with Ku underwater until Riggs sees an AK-47 and shoots Ku. Murtaugh wakes up and goes in to rescue Riggs.
-Riggs visits his wife's grave and asks her for advice about his marriage to Lorna. He is interrupted by Leo, who tells a story about his childhood which makes Riggs rethink the idea of marriage. His beeper goes off, indicating Lorna is giving birth, and they rush to the hospital. Riggs and Lorna are ceremonially married by a rabbi just before their and Rianne's babies are born. Murtaugh accepts Butters as his son in law and Hong's family is granted asylum, meaning they will become US citizens.