Team Arch's latest sting operation goes sour when two uniformed officers intervene, resulting in a high-speed chase through the city which causes widespread damage. Their crooked FBI handler, Inspector Dolan Tyrell, reprimands SpongeBob for his behavior and threatens to fire him unless he changes his ways on the force, which SpongeBob promises to. While the rest of Team Arch work on the sting operation, SpongeBob, Squidward, and Sakura arrive at Malcom's apartment to find it has been broken into by Malcom's childhood friend, Donny Russo, who did time in prison, but ended up working as a security guard in Beverly Hills, thanks to Malcom, who had met with him at the time of his release. Donny shows them some German bearer bonds. Although Malcom wonders how he got them, he chooses not to question him about it as it might mess up Donny's career. After hanging out at a diner, they return to Malcom's apartment, where two men, Zed and Coy, knock the trio unconscious, and confront Donny about the bearer bonds before killing him.
Malcom asks to investigate Donny's murder, but Inspector Tyrell refuses to allow it because of his close ties to Donny. SpongeBob, Squidward, Sakura, and Malcom use the guise of taking vacation time to head to Beverly Hills to solve the crime alone, while bring a worried Mizu along. At an art gallery, the team learns about Donny's ties to Vikram Lavern, the gallery's owner. Posing as a deliveryman, Squidward goes to Lavern's office and sternly tries to question him about Donny, but is thrown out a window by Lavern's bodyguards and arrested. At the police station, the team bails out Squidward, but Lieutenant Alan Bowman assigns Detectives Marty Bravo and Simon Irvine to follow them. During this, Marty and Irwin do not get along with the team at first, but they do begin to develop a mutual respect after they foil a robbery at a diner.
On the trail of Donny's killers, Sakura and Mizu sneaks into one of Lavern's warehouses, where they find crates full of coffee grounds, which they suspects were used to pack contraband while covering their scent from police dogs. They also discover that many of Lavern's crates have not gone through customs. After a scuffle with Zed at Lavern's country club, Squidward gets arrested again, and SpongeBob admits to Bowman that Lavern must be a smuggler. However, Police Chief Hubert Eisner, who has learned of the team's ill-advised investigative actions, blatantly ignores this, and orders that they be escorted out of town. However, Malcom convinces Marty to take them to the warehouse, where a shipment is due to arrive that day.
The team breaks into the warehouse and discovers several bags of contraband inside a crate. Before they can get this newfound evidence to BHPD, Lavern and his associates arrive. Lavern takes Sakura and leaves the rest to be killed, but not before Zed admits to them that he was the one who killed Donny. After some hesitation, Marty enters the warehouse and rescues the team during a brief gunfight in which he kills Coy. Simon tracks them to Lavern's estate, where he joins them in their efforts to rescue Sakura and bring Lavern to justice. Together, the team wipes out a number of Lavern's men, including Zed, finally giving Donny the justice he deserves. With Bowman's help, SpongeBob, Mizu, and Squidward then fatally shoot Lavern and rescue Sakura. Although Eisner is outraged at the team circumventing the punishment, he decides to leave them be as they had just saved one of their own, and to recognize the case involving Lavern. Realizing that their exploits while "on vacation" are likely to get all of Team Arch thrown off the Detroit PD, the team requests that Bowman and Eisner smooth things over with Inspector Tyrell, with the two agreeing to wipe the slate clean for them. Later, Marty and Simon meet the team as they check out of their hotel room. The movie ends with the team heading back to San Francisco to start a memorial service for Donny.
