The pirate Yellowbeard (Chapman) is incarcerated for 20 years for tax evasion. He survives the sentence but has not disclosed the whereabouts of his vast treasure. The Royal Navy hatches a plot to increase his sentence by 140 years, knowing that he will escape to set out for his treasure. He does so, recruiting a motley crew of companions. He had left a map of the treasure in the chimney of his wife's pub, but she burned it. She then tells Yellowbeard that she had the map tattooed on their son's head. Things go wrong when his traitorous former Boatswain Mr. Moon (Boyle) takes over the ship. With the Head of the British Secret Service (Idle) hot on their trail, they eventually find the island, where the terrible despot "El Nebuloso" and his majordomo "El Segundo" (Cheech and Chong) have taken residence with the treasure, and the battle for the prize commences.
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