As a child, Princess Dala is given, by her father, the largest diamond in the world, in which if you stare into it can be seen a "Pink Panther" hence the name. However, now as a young woman, rebels in her home country have seized power and are demanding the return of the jewel. Dala relaxes on holiday in an exclusive skiing resort but noted British playboy, Sir Charles Lytton is in town. He is secretly "The Phantom" - infamous jewel thief who has eyes on the Pink Panther. Charles's playboy nephew George follows to the resort in an attempt to steal it and blame it on "The Phantom", not knowing that it's his uncle. On the Phantom's trail is Inspector Jacques Clouseau, from France, and his wife who, unknowingly to Jacques, is the lover of Charles and helper in the Phantom's crime. Jacques tries to stop the attempts but he is so clueless that when several attempts are made at a fantasy-dress party...

Inspector Clouseau disappears, and the Surete wants the world's second best detective to look for him. However, Clouseau's enemy, Dreyfus, rigs the Surete's computer to select, instead, the world's WORST detective, NYPD Sgt. Clifton Sleigh. Sleigh obtusely bungles his way past assassins and corrupt officials as though he were Clouseau's American cousin.

Sam and George strike gold in Alaska. George sends Sam to Seattle to bring George's fiancé back to Alaska. Sam finds she is already married, and returns instead with Angel. Sam, after trying to get George and Angel together, finally romances Angel, who, in the meantime, is busy fighting off the advances of George's younger brother, Billy. Frankie is a con man trying to steal the partner's gold claim.

Belle Duke, in order to get revenge on her former lover Philip Bang, organize his jail break. But instead of Philip is the Italian Felice Brianza...