The local cinema is showing a film condemned by the Church for its X-rated and blasphemous depiction of Saint Tibulus. Bishop Brennan is dispatched to the island to ensure that the priests take to the picket line in protest. But their defiant stand only gives more publicity to the film, which becomes an overnight success. It is left to Father Jack to stop the Bishop from sending them packing.
It's the 'All Priests Stars In Their Eyes Lookalike Competition', and showbusiness personality Henry Sellers, a former alcoholic, has landed on the island to host the festivities. Father Ted is determined not to go as Mother Teresa again, but he isn't the only one to think of Elvis. It takes some quick thinking to beat Father Byrne's team from nearby Rugged Island.
Ted, Dougal and Jack go on an all-expenses-spared holiday to Kilkelly Caravan Park. They meet a young couple, and are soon in trouble with the police. Entertainment comes in the shape of St Kevin's Stump and the Magic Road. Father Jack goes missing; Father Noel Furlong and his youth group turn up to put the final nail in the coffin of the holiday.
The roof of the Parochial House is leaking, and Ted decides on a raffle to raise the funds, with a car as the prize. Unfortunately, an accident with a cyclist puts something of a dent in the vehicle. A similar car is borrowed from the Dancing Priest in order to save the raffle; however, the priests must then win in order to return the car. Despite this intrigue, the roof does not get repaired.
Rabbit-phobic Bishop Brennan pays a visit to investigate reports of Father Jack sleepwalking naked. Unfortunately Dougal has overrun the house with rabbits, and a Terry & June-style farce ensues as Ted and Dougal attempt to keep Father Jack in bed, and the ever-multiplying rabbits away from the bishop.
Ted is asked to compere the 'Lovely Girls' competition while Dougal is left in charge of the house. Father Jack is mistaken for Bob Geldof and Dougal manages to give the house away to a feminist rock star called Niamh Connolly. Ted has to get the house back, but how will this affect his dinner plans with the winner of the 'Lovely Girls' competition?
Ted and co. enter a giving-things-up-for-Lent contest and soon discover that abstinence is easier preached than done. Father Jack sobers up for the first time in years, but Dougal and Ted find their resolve wavering. To strengthen their vows Ted calls in a nun to supervise them. She turns out to be a sadist of the first water, and the results are inevitable.
After discovering Father Jack is suffering yet again(!) from "hairy hand syndrome," Ted is delighted to send Jack, by "doctor's orders," to St. Clabberts Old Folks Home (otherwise known as 'Jurassic Park'). Unfortunately, Jack's replacement happens to be one of the nastiest priests ever - Father Fintan Stack. Along with his disregard for the church, Stack has a rather irritating habit of playing jungle music loudly at 3 o'clock in the morning, and a plan is hatched to get Jack back to sort out Stack.
Ted and co. end up being crammed in a plane along with every other priest who has appeared in their lives after a visit to the Shrine of Kinlettle. In a fit of the usual stupidity, Dougal manages to empty the fuel tanks on the plane. To make matters worse, there are only two parachutes to go around many more priests, so Ted devises a way for the priests to compete for the parachutes. Unfortunately, Jack has other plans for the parachutes.
Ted and Dougal are enlisted to host the annual Comic Relief telethon. Ted is baffled as to why Comic Relief would select two unknown Irish priests for the job. Dougal theorises that God planned the event as an opportunity for Ted to atone for stealing money from a charity. Ted decides God may forgive him if they succeed in raising the target of £8 million.
Ted finally escapes to a new posting at Castlelawn Parochial House, Dublin, with civilised company and frequent jaunts to Paris. Unfortunately a slight misunderstanding over some expenses sends Ted back to his old compadres on the island. After a spot of lad's housecleaning results in Ted being mistakenly tarred as a racist, Ted holds a celebration of Chinese culture to clear his name (though 'Kung Fu Fighting' might not have been an inspired choice of soundtrack). Just when it looks like a happy ending might be in store, a mix-up over some soft furnishings and Nazi memorabilia leaves the Chinese community with a sweet'n'sour taste in the mouth.
Ted and Dougal turn detective to discover who's behind the bumper crop of hairy babies on Craggy Island. However when justice is done on the culprit he takes a terrible revenge. Dougal's moonlighting stint as island milkman is marred by a bomb set to go off if the milk float drops below 4 mph. Does 'The Poseidon Adventure' hold the key to his rescue, or would Father Jack's pet brick come in more useful?
A perfectly routine trip to the mainland results in Dougal almost dying from malnutrition, Mrs Doyle being chucked in the clink, Ted nearly being beaten up by Victor Meldrew, and Father Jack joining Alcoholics Anonymous. A chance encounter with old friends Noel Furlong and the St. Luke's Youth Group in some spooky caves spells spelaeological trouble for our heroes.
It's the All-Priests Over-75s Five-A-Side Football challenge, and disaster looms when Ted's star player is nobbled by a bottle of Dreamy-Sleepy Nighty Snoozy-Snooze. Fortunately a pair of fake rubber arms and a remote-controlled wheelchair put our lads in with a chance of beating Dick Byrne this year. As long as they can fool the referee...
A lost bet with Dick Byrne means Ted has to kick Bishop Brennan up the arse. On cue, Len arrives with PA Father Jessup, the world's most sarcastic priest. Elaborate preparations, a camera, a skirting board, a set of watercolours and some psychological warfare on Ted's part ensure a successful outcome... or do they?
Ted performs a genuinely unselfish act, and is rewarded with the offer of a parish in California - his wildest dreams come true. However, parting from his long-time companions at the Parochial House proves tricky. Unless Ted can break the news of his departure tactfully to Dougal, Jack and Mrs Doyle, he won't be going to America...