Austin Powers, a super-spy from the 1960s, and his arch-nemesis Dr. Evil, (both played by comedian Mike Myers) have faced each other many times during the decade. In 1967, Dr. Evil plans a trap for Austin at the Electric Psychedelic Pussycat Swinger's Club one of Austin's known hang out's. At the club Austin and his partner Mrs. Kensington (Mimi Rogers) are attacked by one of Dr. Evil's assassins disguised as a waitress but they managed to subdue him, Dr. Evil escapes and Austin and Mrs. Kensington confront him but he places himself in cryostasis to return at a time when he would not be expected. Austin volunteers to have himself placed in cryostasis as well, should his services be requested in the future.
Thirty years later in 1997 when news of Dr. Evil's return from cryostasis after being frozen for thirty years reaches the world, Austin is unfrozen. He is then paired with Vanessa Kensington (Elizabeth Hurley), the daughter of his 1960's partner Mrs. Kensington to help him cope with the 90's. The duo sets off on Austin's jet to Las Vegas to locate Dr. Evil.
Meanwhile, Dr. Evil discovers that his cat, Mr. Bigglesworth, has gone completely bald due to the cryogenics. Mustafa (played by Will Ferrell), who was instructed to resolve this problem, gets vaporized but does not die immediately, so he ends up being fatally shot in the arm twice. Dr. Evil then discusses with his associates how to take over the world. First, he says that he should make it look like Prince Charles is having an affair so he and Princess Diana will divorce, but Number 2 informs him this has already happened (the movie was released in the theaters 6 months before Diana's death). Then he suggests they create a hole in the ozone layer, causing an high increase in skin cancer, but Number 2 says this has already happened as well. In reaction to this, Dr. Evil says one of his most famous lines: "Throw me a frickin' bone here!" They eventually decide to hijack a nuclear warhead and hold the world hostage. Dr. Evil, in addition to finding that a million dollars is not worth that much anymore, meets his son, Scott. Frau reveals their new secret weapon, android models with guns that pop out of their breasts, a.k.a. Fembots. They consider it a good weapon on Austin, who would automatically fall for the robots. Dr. Evil and Scott then attend a therapy session (with Carrie Fisher as the therapist), in which Dr. Evil tells his life story.
Austin and Vanessa, after an argument on the plane about her having sex with him, land in Las Vegas. They are forced to share a room, much to Vanessa's disgust, as Austin is not very hygienic. Posing as a married couple they soon begin their work pursuing Dr. Evil, following Number 2 and his Italian secretary Alotta Fagina into a casino. After a Blackjack match, Vanessa and Austin spend more time together, going around in Vegas. Vanessa ends up intoxicated and begging Austin to have sex with her. Strangely enough, Austin does not want to, saying it would not be right to take advantage of a woman like her, tempting though she is. He is then prompted to go to Alotta Fagina's penthouse to get information on Dr. Evil's doomsday device. He finds the information at the penthouse, Dr. Evil will use the warhead in a drill to go into the center of the earth. But Alotta soon discovers him, and seduces him into sex with her.
After a mission briefing, Vanessa and Austin go to Dr. Evil's headquarters, which is actually the HQ of the cable company he owns. They sneak in though the entrance to the inside of the real headquarters. They are eventually captured, and even though Dr. Evil requested sharks with laser beams on their heads, they are placed in a room with flesh-eating sea bass because the sharks were on the endangered species list and the laser beams were not perfected. Scott objects, saying they will escape, and volunteers to kill them himself but Dr. Evil goes on with the plan. They escape using dental floss, and blinding the guard with toothpaste, causing him to fall into the tank. However, they gain valuable insight on Dr. Evil's plan. The British army then plans a raid on Dr. Evil's headquarters.
When they invade the headquarters Austin is exposed to the Fembots whom almost subdue him. He then realizes he can defeat them by working his mojo. This is successful, but he is stripped of all but his Union Jack underwear, and Vanessa and two soldiers walk in on him. When he explains how he defeated the androids, Vanessa believes him, and they continue to search for Dr. Evil.
They eventually locate the Doctor, and he and his henchmen are about to carry out their plan. While "Secret Agent Man" plays in the background, Austin and Vanessa with help from British forces stop Dr. Evil's doomsday device, but Dr. Evil soon flees closely followed by Austin. During this showdown, Dr. Evil remarks on the irony that all of the things Austin stands for — free love, sixties music, and patriotism for example — are now considered 'evil' by modern teenagers in retaliation for Austin thwarting his escape. Austin replies that his generation wasn't about those things. If his people had known the consequences of such a lifestyle, they would have lived differently but the spirit would have remained the same. Just then, Alotta Fagina shows up holding Vanessa hostage. This distracts Austin and when Scott enters Austin holds him hostage to "turn the tables" but Scott runs away angered that his father turns down "his breakthrough in group" and that wishes he was never artificially created in a lab. Number 2 appears and Dr. Evil orders him to kill Austin but he refuses and instead attempts to make a business proposition to Austin. Dr. Evil seemingly kills Number 2 and executes the lair's self-destruct sequence and escapes back to space while Vanessa knocks Alotta unconscious. Austin and Vanessa manage to escape the lair in time.
Later, Austin and Vanessa get married, leading to a scene with genital cover-ups. After foiling Random Task's last-ditch attempt at their lives, they go out to the balcony. Noticing a rather bright star Austin pulls out a telescope and is shocked to discover that the star is in fact Dr. Evil's cryogenic chamber.
- Mike Myers as Austin Powers and Dr. Evil
- Elizabeth Hurley as Vanessa Kensington
- Michael York as Basil Exposition
- Robert Wagner as Number Two
- Seth Green as Scott Evil
- Mimi Rogers as Mrs. Kensington, Vanessa's mother and a secret agent from the 1960s
- Fabiana Udenio as Alotta Fagina
- Mindy Sterling as Frau Farbissina
- SGC Belfry Ted Nude-Gent as hairless Mr. Bigglesworth
- Paul Dillon as Patty O'Brien, an Irish assassin
- Charles Napier as Commander Gilmour
- Joe Son as Random Task
- Will Ferrell as Mustafa
- Carrie Fisher as the group therapist
- Clint Howard as Radar Operator Johnson Ritter
- Michael McDonald as henchman flattened by steamroller
- Rob Lowe as an unnamed friend of Dr. Evil's deceased henchman
- Christian Slater as the easily fooled security guard
- Neil Mullarkey as the quartermaster clerk
- Burt Bacharach as himself