Joan Wilder is a successful but lonely romance novelist in New York City whose editor believes she is waiting to meet a romantic hero like the ones she writes about. Joan gets a call from her sister Elaine, who has been kidnapped by antiquities smugglers, cousins Ira and Ralph. As Joan leaves her apartment to meet her editor, Gloria, she is handed a letter containing a map, sent to her by her late brother-in-law, Eduardo, who had been murdered a few days prior. While she is gone, a man tries to break into her apartment and is discovered by her apartment supervisor, who he kills. Returning to her apartment, Joan finds it ransacked. Joan then receives a frantic phone call from Elaine (held at knife-point by Ira), who instructs Joan to go to Colombia with the map she received; it is Elaine's ransom.
Taking place six months after the events in ''Romancing the Stone'', Joan Wilder's (Kathleen Turner) and Jack Colton's (Michael Douglas) romance has grown stale. While moored at a port in the South of France, Joan, suffering writer's block, wants to return to New York, while Jack prefers aimlessly sailing the world on his boat, the ''Angelina''. At a book signing engagement, Joan meets Omar (Spiros Focás), a charming Arab ruler who wants Joan to write his biography. Joan accepts and leaves with Omar over Jack's protests. Jack later runs into Ralph (Danny DeVito), the swindler from Jack and Joan's previous adventure in Colombia, who demands Jack turn over the gem Jack and Joan found. Shortly after, an Arab, Tarak (Paul David Magid), informs Jack about Omar's true intentions and claims that Omar has the "Jewel of the Nile"; just as Tarak finishes his explanations, the ''Angelina'' explodes from a bomb set by one of Omar's men. Ralph and Jack team up to find Joan and the fabled jewel.