Reckless but talented Detroit policeman Axel Foley (Eddie Murphy) conducts an unauthorized sting operation, using a truck full of cigarettes (seized by the police as evidence in another case) to attempt to bust two hustlers (Frank Pesce and Gene Borkan). The 'deal' is interrupted by two patrolmen, resulting in one criminal fleeing on foot and the other escaping in the truck, with Axel trapped in the back. After an extensive chase, causing widespread damage, the truck crashes and the other man runs off, leaving Axel empty-handed. At the police station, he is severely reprimanded by his ill-tempered boss, Inspector Todd (Gilbert R. Hill), who informs Axel that if he conducts any further unapproved operations, he will be fired and brought up on charges.Axel goes home to find his ex-con best friend Mikey Tandino (James Russo) in his apartment, fresh from a job he got in Beverly Hills working for their mutual childhood friend, Jenny Summers. Mikey shows off some German bearer bonds he "borrowed" from his employers, which momentarily concerns Axel, but he is more interested in catching up with his old friend. After a night of drinking, Axel and Mikey return home and are accosted outside Axel's apartment by a burly man Mikey recognizes as Zack (Jonathan Banks). Zack knocks Axel unconscious before he sees anything. He then confronts Mikey about the bearer bonds, then shoots him twice in the head. After the police respond, Axel asks Inspector Todd to be let in on the case, but Todd flatly refuses. Deciding to secretly root around from a different angle, Axel asks for and is granted two weeks' vacation time.Axel then drives his "crappy blue Chevy Nova" all the way to Beverly Hills, California and, masquerading as a reporter for magazine, manages to check into a suite at the high-end Beverly Palm Hotel. He then meets up with his old friend Jenny (Lisa Eilbacher), who tells Axel that she (and Mikey) work for international-British-born art dealer Victor Maitland (Steven Berkoff). Axel finagles his way into Maitland's office, where Zack is revealed (to the viewers) to be the art dealer's right-hand man. Axel presses Maitland for answers about Mikey, but Maitland has his bodyguards throw Axel out - literally through a glass window on the main floor.Outside, Axel is confronted by the Beverly Hills police over a report of disturbing the peace. Finding his gun, they arrest him for possessing a concealed weapon, as he cannot afford to identify himself as a police officer. At the police station, he is questioned by Sergeant John Taggart (John Ashton) and Detective Billy Rosewood (Judge Reinhold). Taggart takes issue with Axel's irreverence and punches him in the stomach. Lieutenant Andrew Bogomil (Ronny Cox) steps in to reprimand Taggart and presses Axel further, adding that he has spoken to Inspector Todd back in Detroit, who hints that Axel will be fired if he finds out that Axel is investigating Mikey's death.Jenny bails Axel out, and takes him back to the hotel, tailed all the while by Taggart and Rosewood, who have been assigned to watch him. As the detectives watch and wait across the street from the hotel in an unmarked car, Axel places a late supper order with room service to be delivered to them. He then coaxes a waiter to give him some bananas from a party tray, which he stuffs into the unmarked car's tailpipe while Rosewood and Taggart are distracted by the room service waiter. When Jenny and Axel leave the hotel, Taggart and Rosewood try to pursue, but their vehicle stalls, thanks to the bananas in the tailpipe.Axel and Jenny sneak into one of Maitland's warehouses, where they observe two of his men removing bearer bonds from a crate. Axel also discovers some coffee grounds around some of the crates. Axel then has Jenny follow the two men to a loading dock, where he sneaks in alone, noticing that the crate that formerly contained bearer bonds is placed among other crates waiting to be processed. When he crosses paths with a security guard, Axel passes himself off as a Customs inspector, demanding to see the records for all the crates in the warehouse.When Axel returns to the hotel, he spots Taggart and Rosewood still sitting in the unmarked car, waiting for him. Axel sneaks into the car, startling both men, who are irritable because they lost two days pay over his antics. Axel offers a truce of sorts, by letting them escort him to "someplace classy." "Someplace classy" turns out to be a stripper bar. While there, Axel notices two men entering the club wearing trench coats. Immediately suspicious because it is June (too hot for coats) he deduces that the men intend to rob the place. Axel's suspicions prove true, and the men produce shotguns from under their coats. Axel and Taggart successfully disarm the would-be robbers, leading to a new sense of respect between them. Later, Axel lies to Bogomil that Taggart and Rosewood had tailed him to the strip club and that they deserve all the credit for the collar, but Taggart and Rosewood admit to Bogomil that they had accepted Axel's invitation to the establishment and that Axel had initiated the take-down. Though thankful that Axel had prevented the robbery, Bogomil is fed up with Rosewood and Taggart's seeming incompetence and assigns two other detectives, Foster (Art Kimbro) and McCabe (Joel Bailey) to tail Axel. Axel gently reprimands Taggart and Rosewood before he leaves, pointing out the lie he told about their actions was working.The next day, Foster and McCabe catch up to Axel, who is loitering outside Maitland's gated mansion. When Maitland's car emerges from the compound, Axel jumps into his Nova and follows, with the detectives on his tail. Axel artfully loses Foster and McCabe and follows Maitland to a high class country club. He cons the maitre d' into letting him into the banquet hall, where he directly accuses Maitland of killing Mikey. Zack grabs Axel, who counter-throws him into the buffet, which brings the police to the venue. Axel is arrested again.At the police station, Bogomil demands answers, which Axel finally gives at what he knows; Maitland is smuggling bearer bonds into the country and he had Mikey killed because he stole some of the bonds. Axel also accuses Maitland of trafficking drugs, thanks to the coffee grounds that Axel found in the warehouse; Bogomil acknowledges that drug traffickers sometimes pack cocaine in piles of coffee grounds to throw off drug-sniffing dogs. Bogomil finally sympathizes with Axel, and is intrigued by the theories he presents, but admits that he cannot arrest Maitland on pure speculation. To make matters worse, the no-nonsense Police Chief Hubbard (Stephen Elliott) has ordered Axel to leave Beverly Hills, having heard of his numerous indiscretions throughout the city. Bogomil, under orders from Hubbard, tells Rosewood to escort Axel to the city limits.Axel mentions to Rosewood that Maitland has another shipment due, which he decided not to tell Bogomil once he realized Bogomil couldn't or wouldn't help. Rosewood takes him to see Jenny at the art gallery, where Axel asks for her warehouse key, but she insists on coming along. Rosewood waits in the unmarked car, not being able to go in until Axel and Jenny establish the presence of evidence, otherwise it would be an illegal search. Sneaking into the warehouse, Axel opens a crate that turns out to contain large bags of cocaine hidden inside coffee grounds. Suddenly, Zack and his men appear and take Axel and Jenny at gunpoint. Outside, Rosewood watches helplessly as Maitland and more of his men enter the warehouse. Axel and Maitland exchange words, and Zack admits to Axel that he killed Mikey. Maitland and Zack then leave with Jenny as their hostage, leaving Axel to the mercy of their men. Rosewood finally decides to enter the warehouse and helps Axel to escape. On their way to Maitland's mansion, Rosewood contacts Taggart, telling him about the drugs in the warehouse and to not tell Bogomil about anything. Taggart tells Foster and McCabe to check out the warehouse, then rushes to meet up with Axel and Rosewood.Axel, Rosewood and a reluctant Taggart sneak in to the mansion's grounds, but are soon pinned down by gunfire from Maitland's men. Back at the station, Bogomil is puzzled by the absence of the four detectives, then hears about a call of shots fired. When he discovers that the address is Maitland's, Bogomil calls for all cars to descend on the mansion.At the mansion, the police temporarily gain the upper hand, shooting down several gunmen. Axel tells Rosewood and Taggart to cover him as he enters the mansion. Inside, Zack has his weapon drawn and is hunting Axel. The cat-and-mouse game ends with Axel shooting Zack dead. Savoring his victory for a moment, Axel takes a large caliber bullet in his arm, courtesy of Maitland. Bogomil and a fleet of police officers arrive at the compound and arrest Maitland's surveillance and security teams. Inside the mansion, Axel confronts Maitland, who is holding his gun to Jenny's head. Neither man moves, until Bogomil appears behind Axel with his gun pointed at Maitland. Jenny takes advantage of this distraction to escape from Maitland, and Axel and Bogomil empty their guns into Maitland, killing him.When the smoke clears, Hubbard shows up, demanding answers. Bogomil makes up a story, insisting that he himself had led the investigation into Maitland's activities, thanks to Jenny and Axel's tips, and that Axel was merely an observer at the scene. Skeptical, Hubbard asks Taggart to confirm the story, which he does, having learned his lesson from the strip club incident. Finally, Hubbard decides to accept Bogomil's version of the events. Axel begs Bogomil to talk to Todd in Detroit, saying that if he lost his job in Detroit, he would move to Beverly Hills permanently and work as a private detective. Bogomil promises to clear everything up.That evening, Axel prepares to check out of the Beverly Palm when Rosewood and Taggart arrive. They tell him that Bogomil insisted that they personally escort him to the city limits. When Axel's tab is produced, Taggart informs the desk clerk that the Beverly Hills Police Department will pick it up. Axel is moved by the gesture and "gives" each detective a hotel bathrobe (also paid for by the police department). Once outside, Axel offers to share a drink with his new friends; Taggart, who originally touted doing things "by the book," decides that one drink "won't kill us" and he and Rosewood follow Axel, who says that they will be going to "the perfect place; you guys'll love it. Trust me."