Stan, Kyle, Kenny, Eric and Kyle's adopted brother Ike head to the movie theater to watch the new Terrance and Phillip movie, Asses of Fire. However, as they are children, and the movie is rated R, they are denied entry. They get a homeless guy to buy tickets for them and watch the movie. Everyone else in the theater besides the boys walk out as the film is nothing but crude jokes, flatulence humor and excessive swearing. The boys impress all of their friends with their strong language, except for Wendy and new transfer student Gregory, and all the other children go see the movie.
The next day, the four boys are sent to Mr. Mackey's office for swearing in class, and their mothers arrive. Cartman immediately admits they started swearing because they saw the Terrance and Phillip movie. In the cafeteria, Stan asks Chef how he can get girls to like him, and Chef tells him to find the clitoris. Mr. Mackey holds a rehabilitation session with the kids to teach them to not use foul language. It initially works, but after the boys watch the movie again, they go back to swearing.
Kenny makes a bet with Cartman he can light a fart on fire, and predictably gets set on fire. He is rushed to the hospital, where he is killed by his heart being replaced by a baked potato. Kenny is denied entry to Heaven and is sent to Hell. There he meets Satan, who is in an abusive relationship with Saddam Hussein.
Stan, Eric and Kyle all get grounded for seeing the movie again, and Kenny's death prompts Kyle's mom Sheila to start the Mothers Against Canada movement. Terrence and Phillip get arrested on Late Night with Conan O'Brien. At the United Nations, the Americans refuse to return Terrance and Phillip and openly laughs at the Canadian pronunciation of "about." Enraged by this, the Canadians respond by bombing the residence of the Baldwin brothers. The US declares war on Canada and arranges to have Terrance and Phillip executed during a USO show.
Eric sings a song about how Kyle's mom is a bitch, which she overhears. He gets a V-Chip implanted in his brain, which shocks him whenever he swears. Kyle, Stan and Cartman decide to form La Resistance and get the message out to the children of South Park, with the promise of punch and pie. In Hell, Kenny discovers that Terrance and Phillip's deaths will allow Satan to invade and conquer Earth. He visits Cartman as a ghost to warn him.
Gregory comes up with a daring plan to rescue Terrance and Phillip. Stan is concerned that Wendy will like him more than Gregory if he is more "political" and volunteers to go on the mission. Stan, Kyle, and Cartman are sent to find "The Mole," a French boy who was grounded by his mother for insulting God, but who agrees to help them rescue Terrance and Phillip. Kyle hides Ike in their family's attic as Canadians are sent to internment camps.
Back in Hell, Kenny suggests Satan should leave Saddam for good. Satan tries to break up with Saddam, but after he sings a song about how he can change, can't go through with it. After the boys infiltrate the show, Stan and Kyle attempt to stall the execution, while Cartman attempts to deactivate the alarm as the Mole prepares to free Terrance and Phillip. However, Kenny's ghost reappears before Cartman, who runs away in fear, forgetting to shut down the alarm. The Mole is discovered and fatally mauled by guard dogs. Kyle and Stan desperately run to the stage to prevent the execution, but Kyle cannot bring himself to stand up to his mom and Sheila orders it to start.
The execution is interrupted when the Canadian Army launches a surprise attack, resulting in a massive battle between the two armies. Cartman deactivates the electrical switch, and the electrical shock causes his V-chip to malfunction. Stan gets knocked out and reawakens before a sentient clitoris, who tells him to be self-confident to gain Wendy's affection. All the other M.A.C. members besides Sheila decide to abandon their cause after seeing what they have incited. The children form a human shield in front of Terrance and Phillip as Kyle tries to reason with his mother. Sheila shoots Terrance and Phillip dead, allowing Satan to arrive. Saddam usurps Satan and demands that everyone bow to him. Cartman goes on profanity-laden tirades to use the malfunctioning V-Chip to blast electricity at Saddam. Satan finally stands up to Saddam and throws him back to Hell, where he is impaled by a stalagmite.
Satan thanks Kenny for helping him and offers to grant him one wish. Kenny wishes for everything to go back to the way things were before the war started, much to everyone's surprise. All of the casualties are undone, Sheila apologizes to Kyle, and Wendy suddenly kisses Stan, admitting she never liked Gregory. For his sacrifice, Kenny is allowed into Heaven.
A brief post-credits scene shows Ike eating a rat while waiting in the attic for his mom to return.
