In 2002, from his lair behind the Hollywood Sign, Dr. Evil unveils to Number 2, Mini-Me, Frau Farbissina, and Scott Evil his plan for world domination: traveling back in time to 1975 and partnering with the Dutch, gold-obsessed Johan van der Smut, who, after losing his genitalia in a smelting accident, is known as "Goldmember". Goldmember developed a power unit for a tractor beam and intends to use it to pull a meteor into the earth. Moments after unveiling this plan, Austin Powers arrests Dr. Evil and Mini-Me. Queen Elizabeth knights Austin for his service, but he is disappointed when his father, the famous spy Nigel Powers, does not attend the ceremony. During an after party, Basil Exposition informs Austin that his father has been kidnapped. Their only clue is that the crew of Nigel's yacht have had their genitalia painted gold.
Austin seeks help from the imprisoned Dr. Evil to find the kidnapper. Dr. Evil antagonizes Austin by reminding him that Nigel was also absent when Austin and Dr. Evil graduated from the British Intelligence Academy. Dr. Evil tells Austin that Goldmember was behind the abduction, and in exchange Austin transfers Dr. Evil to a regular prison so he can be with Mini-Me. Austin travels to 1975 and infiltrates Studio 69, Goldmember's roller disco club in New York City. He is reunited with his former lover, undercover FBI agent Foxxy Cleopatra. Austin locates his father but is unable to rescue him. Goldmember takes Nigel through Dr. Evil's time machine to 2002 and Austin and Foxxy also escape back to 2002. Dr. Evil and Mini-Me instigate a prison riot and escape. Number 3, a British Intelligence mole, informs Austin that Dr. Evil has moved to a new lair near Tokyo.
Austin and Foxxy travel to Tokyo and confront Fat Bastard, who is now a sumo wrestler. Fat Bastard reveals that businessman Mr. Roboto is working on a device for Dr. Evil and Goldmember. Austin and Foxxy meet with Roboto, who pleads ignorance. The duo infiltrate Roboto's factory where the command unit for the tractor beam is being loaded into Goldmember's car. Foxxy confronts Goldmember while Austin attempts to free Nigel. However, Goldmember escapes and flees to Dr. Evil's submarine with the tractor beam. Dr. Evil's son Scott, now interested in taking over the family business, offers his father a gift: a tank of sharks with laser beams attached to their heads. Scott then kills Roboto by feeding him to the sharks. Dr. Evil shows favoritism towards Scott over Mini-Me, which motivates Mini-Me to defect and join Austin and Foxxy.
Austin, Foxxy and Mini-Me infiltrate the submarine, where Austin is captured. Before Dr. Evil can activate the tractor beam, Foxxy steals the key and frees Austin. When Austin prepares to shoot Dr. Evil, Nigel appears and reveals that Austin and Dr. Evil are brothers, and that Dr. Evil's name is actually Dougie. Austin, Doug, Nigel, and Mini-Me embrace in reconciliation, which enrages Scott. Goldmember commandeers the tractor beam's controls, revealing his golden genitalia to be a spare key. He activates the tractor beam, but Austin and Doug work together to reverse its polarity, destroying the meteor and saving the world which results in Goldmember getting arrested.