The film takes place in the town of Paradise, Arizona, where a volatile young Dude (Zack Ward), after being mocked at a job interview, kicked out of his local unemployment office and discovering that his morbidly obese wife is cheating on him, is more than a little angry and is desperate to get enough cash to finally leave his dead-end town.
He decides to team up with his Uncle Dave (Dave Foley), a slovenly con artist turned doomsday cult leader who owes the US government over a million dollars in back-taxes. With the help of Uncle Dave's right hand man Richie (Chris Coppola) and an army of big-breasted, scantily clad cult members, the Dude devises a plan to hijack a shipment of 2000 Krotchy Dolls, a rare, sought-after plush toy resembling a giant scrotum. Uncle Dave plans to sell them online, where their prices have reached as high as $4,000 a doll.
Unbeknownst to them, Osama bin Laden (Larry Thomas) and his group of Al-Qaeda terrorists, who had been secretly hiding in Paradise since September 11, under the watchful eye of bin Laden's best friend George W. Bush (Brent Mendenhall), are after the same shipment, but for entirely different reasons. Hoping to outdo the catastrophe of 9/11, they plan to instill the dolls with Avian influenza and distribute them to unsuspecting American children.
The two groups meet at the shipment's destination, Nazi-themed amusement park Little Germany. A fight between Postal creator Vince Desiderio and Postal director and park owner Uwe Boll (which ends with Boll being shot in the genitals, confessing "I hate video games"), sparks a massive shootout between the cult, the terrorists and the police, resulting in the death of dozens of innocent children. The Dude and the cult are able to get away with both the shipment and the park's opening day guest Verne Troyer, pursued by Al-Qaeda, the police and a mob of angry citizens.
Upon returning to their compound, which has been overtaken by the terrorists, the Dude, Uncle Dave and the rest covertly sneak into the compound's underground bunker, where Richie reveals that he has must now fulfill the prophecy foretold in Uncle Dave's fictional Bible: to bring about the extinction of the human race. As per Uncle Dave's Bible, the event initiating the apocalypse is the rape of a "tiny entertainer" by a thousand monkeys. After Verne Troyer is quickly thrown into a pit of chimpanzees, Richie shoots and kills Uncle Dave, then imprisons the Dude.
The Dude manages to escape the compound with a plethora of weapons, deciding to wage a one-man war against Al-Qaeda, his uncle's murderer, his cheating wife, the police and the many people who want him dead. On the way to his trailer (where he plans to blow up his spouse), he meets up with an attractive young barista, Faith (Jackie Tohn), who joins forces with him after an explosive gunfight. After The Dude's heartfelt, but futile monologue about war, the two of them then proceed to kill all the terrorists, all the bloodthirsty townspeople, the remains of the now-mad cult, his wife, and her multiple lovers. In the midst of the shootout, Osama bin Laden escapes to a payphone, where he calls George Bush for help. Bush sends a helicopter to save him and plans for the two to rendezvous.
Having won their war, the Dude, his dog and the barista drive away in a stolen police car. They casually turn on the radio, only to learn that Bush has blamed the day's shootouts and explosions on China and India, and has been "forced to destroy both countries with nucular [sic] force". China, in retaliation, has unleashed thirty nuclear missiles towards America, which are scheduled to hit in under two minutes. The three drive off into an uncertain future.
The film's final shot features President Bush and Osama bin Laden skipping through a field together, hand-in-hand. As mushroom clouds explode on the horizon, Osama laughs and says, "Georgie, I think this is the beginning of a beautiful friendship".
