Patty Butler (Susan Blakely
), is a very comely young police officer who is pretending to be a runaway girl with the nickname of "Chicklet," and has been given permission by the department to be the live-in girlfriend of Thomas 'Stick' Henderson (Tony King
), a suspected drug dealer, so that the police can gather evidence against him. To back up her cover story, Detective Bo Lockley (Michael Moriarty
) has been given what should be an almost impossible assignment: without being told she is actually an undercover police officer, he is instructed to spend a few weeks trying to find Chicklet. Bo openly looking for and trying to find her will convince Stick that his girlfriend really is a runaway.
Amazingly, Bo is actually an excellent detective and finds her in the sleazy underbelly of the city. Bo is then thanked by his supervisor, Richard 'Crunch' Blackstone (Yaphet Kotto
) and told to go back to his previous assignment. Either infatuated with Chicklet or not able to just allow her to be abandoned by the system, he goes to Stick's loft to try and rescue her. In the process, Bo and Stick become engaged in a firefight, whereupon Stick is able to escape the apartment, and Bo ends up chasing Stick, running across town barefoot, carrying a handgun and dressed only in boxer shorts, into a department store, and are trapped in a Mexican standoff in one of the department store elevators.
Eventually the police barricade the elevator, and Crunch grabs him when Bo and Stick leave through the elevator's emergency exit ceiling panel. Bo having been pulled to safety, the police then open fire on Stick, killing him.
In the aftermath of the firefight and the subsequent killing of Stick, it is discovered that Officer Butler was killed in Stick's loft by Bo, and an investigation has to be made as to whether he was negligent. As a result of the investigation, it's determined that she was killed as a result of Bo trying to defend himself from Stick shooting at him, and thus the shooting was accidental. Bo, however, was so depressed by what he had done that he hung himself in his jail cell before he finds out that it was an accident.
The movie is, in effect, a police report of an incident where a police officer was shot by another officer who later committed suicide in jail, and a suspected perpetrator being killed in a public place (the department store), being made to the Police Commissioner, which is where the title of the film came from.