In a nameless European country, Inspector Ginco (Michel Piccoli) takes every precaution to ensure that a $1,000,000 shipment of money reaches a local bank. Despite having decoy armored trucks, the real one containing the money is sidetracked to a marina where a masked career thief, known only as Diabolik (John Phillip Law) steals the whole truck by lifting up by an electric magnet and dropping it into the water, where he dives in and retrieves the money. In a long chase, Diabolik eludes the police by switching cars with his mistress and partner-in-crime, Eva Kant (Marisa Mell) who drives Diabolik back to his hideout, a remote cave in a mountain side which has miles of underground passageways, and their living quarters is a mod of various expensive designed bought with their ill gotten money.
Having heard of the latest robbery by the masked thief, the Minister of the Interior (Terry Thomas) arranges for a press conference. But Diabolik and Eva sneak into the conference disgused as reporters where, using their flash bulbs on their camera, they set off some 'exhilarating gas'. When the Minister informs the press of this latest theft and preaching to the reporters that he is not to be made a fool of, the Minister is reduced to just that when the gas reduces everyone in the room to hysterical laughter, while Diabolik and Eva quietly leave unnoticed.
Following the press conference, Inspector Ginco attempts to resign. But his boss (Claudio Gora) refuses to accept his resignation. Ginco reluctantly agrees to stay on the police force, and is subsequently put in charge of the current plan to put all criminals behind bars. With tireless precision, Ginco and his men clean up the city. Mobsters are put behind bars, and then executed. When a drug den is raided, the jaded hippies and drug addicted are carted off.
Ralph Valmont (Adolfo Celi), the head of a large crime syndicate which is responsible for most of the murders and drug trafficking in the country, learns about the raid on one of his establishments, and makes contact with Inspector Ginco. In exchange for his life, Valmont promises to help Ginco capture Diabolik.
When the visiting British finance minister and his wife are honored at a gala party in a large castle by the beach, the press, encouraged by Ginco, play up the wifes recent acquisition of a rare emerald necklace, which is to be unveiled at the celebration. Ginco knows that Diabolik will not pass up the chance to steal the valuable jewelry, so he and his men lay in wait all around the castle for Diabolik to show up. Diabolik does show up, by scaling the seaside wall of the castle to the living quarters of the finance minister's wife where he steals the necklace, and makes another clever escape by constructing a makeshift catapult, but tricks Gino and the police into thinking he used it to eject himself to safety, when he really hides underneath it and simply walks out of the castle dressed as a policeman.
Meanwhile, Valmont and henchmen recognize Eva at an Esso filling station, and they kidnap her. After making contact with Diabolik though a local newspaper, he promises to hand over the emerald necklace in exchange for Eva. Valmont wants to meet Diabolik aboard his private airplane. The following evening, Diabolik meets with Valmont's henchmen who herd him aboard Valmont's plane which takes off. But it is revealed that this is all part of Ginco's plan for once the plane reaches a destined spot, Valmont is to release a trap door on his plane which will literally drop Diabolik into the inspector's lap. But the plan backfires greatly when Diabolik figures out what is going on and in the subsequent shoot-out aboard the plane, Diabolik frees Eva, and he and Valmont stuggle in which they fall through the trapdoor, but Diabolik leaves behind a bomb which explodes, killing all of Valmont's henchmen. The three of them parachute to safely on the ground near the police rendezvous spot where in a continuation shoot-out, Diabolik kills Valmont by shooting him before apparently committing suicide when Ginco and the police close in on him.
Ginco is saddened by Diabolik's death for he never got the chance to really arrest him. But Diabolik is not dead. During the shoot-out he took a drug which slowed down his heart and matabolsim to the point where he appeared dead. At the mourge, Eva, disguised as a nurse, arrives and administrates the antidote. Diabolik awakens, and kills the coroner before making his escape.
Unaware of Diabolik's most recent escape, Gino is puzzled over the missing emeralds. Upon reading Valmont's death certificate, an idea puzzles him. All totaled, there are eleven emeralds missing. Valmont died form eleven bullet wounds. Ginco realizes that Diabolik is clever enough to use the jewels as bullets, therby proving a very safe hiding place for them. Ginco runs over to the crematorium to inspect Valmont's ashes. Diabolik, disguised as Valmont's elderly brother, has already arrived to lay claim to his brother's ashes. When the morgue attendant begins to scoop the ashes into a urn, he is shocked to find the emeralds. But before he can do anything, Diabolik knocks him out, and makes his escape with the emeralds. As usual, Ginco arrives at the morgue missing Diabolik by a matter of seconds.
With no other alternatives open, the police offer a $1 million rewards to anybody to is able to lead them to Diabolik, Ginco realizes the foolishness of this plan, but his superiors refuse to listen him because of his string of bad luck in trying to catch Diabolik. Soon after, Diabolik sends a note to the government saying: "in view of the bad use of the government is making of the public's money, I shall take steps to remove it from circulation." In a matter of days, he blows up all tax offices, federal banks, and treasury buildings to smithereens. The former Minister of the Interior, now working as the Minister of Finance, makes another comic appearance on television where he reveals that with the destruction of the tax offices, the tax records of all citizens have been destroyed. He employs everybody to come forward voluntarily and pay the tax they think they owe. His speech elicts nothing but more laughter from the TV viewers.
With the government now strapped for money, Ginco decides to put one last plan into action. He has the entire gold reserve melted down into a 20-ton ingot so that it can make up for the lost taxes. Yet he realizes that Diabolik is going to attempt to steal it too. Rather than be outwitted again, Ginco has the container of the gold partially 'radio activated'. In this way, once it is stolen, he will he able to use radioactive detectors to lead them to Diabolik's hideout, and leading him to all of Diabolik's stolen goods.
The next day, the ingot is duly stolen by Diabolik who sabatoges the train carrying it by blowing up a railroad bridge, in which the railroad car containing the large ingot falls into the river. Diabolik and Eve, donning wet suites, then use inflatable underwater balloons to transport the large container though an underwater passage to their hideout.
At Diabolik's hideout, he dons a protective heat suit and plans to melt down the gold into gold bricks. But as he's doing so, Ginco and his men follow their radiation tracker devices to the underground lair and make their entry. For the first time, Diabolik is caught off-guard by the advancing police, but not entirely unprepared as he decides to flood the entire cavern therby destroying himself and everyone in it. But unaware that the ingot container is partly radioactive, Diabolik leaves his electric drill on the container in which the extreme heat from the drill makes the container glow red hot. Just as Diabolik is about to pull a lever to flood the cavern, the container explodes, showering him in molten gold.
The police are finally delighted to have finally disposed of Diabolik, and allow reporters and the public into Diabolik's cave to put on display Diabolik. But Ginco is not at all pleased by the decision to display the body, which now is a picturesque gold statue for the general public. The police and workers begin to haul all the stolen appliances and loot out of the cave. Later when the cavern is now deserted and empty, Eva, who had earlier fled at Diabolik's instance, comes out wearing a black funeral dress to play her respects to her lover. Ginco appears and places Eva under arrest, but allows her for a few minutes alone with the body. When Ginco leaves for a minute, a distraught Eva catches sight of Diabolik's still exposed left eye. Amazingly, it winks at her. The protective suit he is wearing has prevented him from being burned alive, though he is now trapped in his gold shell. The inspector arrives to take her away. Soon after they leave, a diabolical laugh rings out in the dark, empty cave.