M.A.D. has abducted a prominent seismologist, who is coerced by Dr. Claw to construct a machine capable of generating deadly earthquakes upon the world. Gadget's case takes him deep within the Rocky Mountains, where his misadventures are compounded by a M.A.D. ranger agent and a grizzled, gold-crazed prospector.
M.A.D. engineers an android replica of Inspector Gadget that is used to steal from Metro City's banks in order to have the real Gadget framed for armed-robbery. With our hero wrongfully incarcerated, Dr. Claw sets his sights on kidnapping the Shah of Freeland and demanding a hefty ransom for his release.
In the far-off country of Pianostan, the people remain happy as long as their King is miserable. But M.A.D. has been ensuring that the King is happy in order to disrupt the peace, so Inspector Gadget is sent out to investigate. To further complicate matters, the King looks exactly like the Inspector!
M.A.D. has enlisted the aid of the incarcerated Funny Money counterfeiting gang in a plot to generate millions upon millions of bogus dollars for Dr. Claw to use in his dirty work. Two of the gang's three members manage to escape from prison in order to set up shop, while the last and most talented member, a visually-challenged man named Squint, must be up to the arduous task of bumping off Gadget when he comes to the jail to investigate the break-out.
The Gadget clan faces one last threat from M.A.D.'s Dr. Dumbkopf, which involves battling his hulking, irascible humanoid assistant named the Grappler. Fortunately, sweets, candies, and ultimately Penny's kindness help in soothing the soul of this misunderstood beast and thwarting Dr. Dumbkopf for the last time.
When a space station orbiting Earth goes silent, Gadget must investigate. Penny and Brain tag along aboard the space shuttle that takes Gadget to his destination, where Penny discovers that the station's soft-spoken HAL-like supercomputer is under the control of two M.A.D. agents, Dr. Null and Dr. Void. Their evil plot involves a giant magnifying glass that can aim and intensify the sun's rays towards Earth.