September 11, 2001. Two Al Qaeda terrorist pilots, Asif and Nabi, are seen in the cockpit of an airborne aircraft flying to an unknown destination. Nabi begins arguing with Asif about martyrdom and about according to Islamic tradition, how many virgins one martyr will get upon entering Heaven. Nabi even goes as far as to phone his boss about the number and after they agree that the number isn't satisfactory, they agree to divert their plane from their target to the Bahamas where there are hundreds of virgins on vacation there. Suddenly, the cockpit door comes crashing down as the passengers stage a revolt against their captors (shades of Flight 93). But nevertheless, the plane keeps on going and crashes into the first building of the World Trade Center, killing everyone in the towers, as well as an unfortunate window washer on a scaffolding.
Six years later. In the small town of Paradise, Arizona, a volatile young man, known only as the Postal Dude (Zack Ward) lives in a trailer park with his morbidly obese wife, who's known only as the Dude's Bitch. After losing his job at a local post office, the Postal Dude goes to another job interview at a local office where he is mocked by the cynical employment worker. The Dude gets a coffee at a local Starbucks where he is served by an attractive young barista, named Faith (Jackie Tohn), who is the only person who seems friendly to the Postal Dude in this misanthropic town they live in. The Dude tells Faith that he's more than a little angry about his life and is desperate to get enough money to finally leave this dead-end town.
After the Dude goes to a local unemployment office, he is treated badly by the tellers who tell him to wait, until another customer goes "postal" and begins shooting up the place with a handgun, killing many customers. The Dude tries looking for the shortest ticket number on the dead victims in order to skip ahead in line, but eventually gets thrown out by the ungrateful and mean workers.
The Dude decides to team up with his Uncle Dave (Dave Foley), a slovenly con artist-turned-doomsday cult leader who owes the U.S. 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 2,000 Krotchy Dolls, a rare, sought-after plush toy resembling a giant scrotum. Uncle Dave plans to sell them online on eBay, 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 President 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, a Nazi-themed amusement park called Little Germany. A fight between the Little Germany park creator (Vince Desiderio) and the theme 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. During the chase, the Dude runs over the unemployment clerk who snubbed him earlier.
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 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 again with Faith who joins forces with him after an explosive gunfight at the trailer park. After calling a truce to the fighting, The Dude makes a heartfelt, but futile monologue about war, the Dude and Faith proceed to kill all the terrorists, as well as most of the bloodthirsty townspeople, the remains of the now-mad cult, his wife, and her multiple lovers by blowing up his trailer. In the midst of the shootout, Osama bin Laden, despite being wounded, escapes to a payphone, where he calls George Bush in the White House 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 Faith 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 nuclear force". China, in retaliation, has unleashed 30 nuclear missiles towards America, which are scheduled to hit in under two minutes. But the Dude no longer cares as he now has left Paradise and will enjoy his last minutes with his true soul mate Faith.
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". At that moment, all of the nuclear missiles hit, and the world is destroyed.