Eric and Ernie travel by train through the South American nation of Parazuellia. Eric is unknowingly responsible for the death of rebel leader Torres (whom he resembles), when he opens a train door and Torres falls out.

Eric and Ernie arrive at the town of Campo Grande. Rebels welcome them, mistaking Eric for Torres. The duo erect a stall to sell toy soldiers, but are soon embroiled in a gun battle between police and rebels. They are imprisoned. President Diaz and his children visit the jail, believing that two rebels have been captured. Eric and Ernie are told they will be shot in the morning.

The rebel leaders hide Torres' dead body. Soon after, a fighter from Campo Grande tells head rebel Carillo that police have captured Torres (meaning Eric). Carillo conceals Torres' death and sends his men to free Eric and Ernie. When the duo reach the rebel camp, Carillo offers them one million pesos for their goods, but on one condition: Eric must impersonate Torres and become president. Eric, though initially reluctant, is persuaded when the attractive general Carla threatens to return the duo to jail. Carla's aide Juanita foresees death for Eric in his tea leaves.

That evening, Carillo announces they are to attack the city the following day. Eric is made president after a fierce battle in which President Diaz flees. At a banquet in Eric's honour, the British Ambassador suggests that Eric could become a great liberator. Diaz's children are captured, but refuse to tell Carillo their father's location.

The next day, Eric appears on television to read a speech written by Carillo. When the autocue fails Eric makes his own speech, promising to drastically cut working hours and taxes and provide six weeks paid holiday for all. The people of Parazuellia celebrate, but the rebels are furious. They decide Eric must go. Carillo and Carla hatch a plan to fake Eric's assassination.

Eric signs an official paper at Carillo's request. Carla appears soon after, pretending she is in love with Eric. She suggests that Eric might be assassinated due to the paper he has unwittingly signed, authorising the execution of Diaz's children. Carla proposes that they fake Eric's assassination at the banquet that evening. He can then secretly leave the country. With plans for the bogus assassination in place, Carla supplies a gunman with a blank cartridge. After Carla leaves, however, Carillo swaps it for a live one.

Carla tells Ernie of her plan so that he and Eric can escape after the shooting. Ernie becomes suspicious after discovering that the getaway car is a hearse. He tries to warn Eric, but is too late. Eric is shot. Carillo arrests the revolutionary committee and kills Eric's assassin before he can reveal Carillo's guilt. Carla plans to mobilise the Women's Army against Carillo.

Ernie discovers that Eric is alive - an old retainer had provided him with a bulletproof waistcoat. Carla and Juanita help Eric and Ernie to escape with Diaz's children (due to be shot the next morning). The children lead Eric and Ernie to their father's military museum hideout. Juanita arrives on horseback to reveal that Carillo's soldiers are preparing an attack.

Ernie oversees defensive operations. Wax museum dummies are positioned on the ramparts to give the impression of more men. As Carillo's soldiers prepare a charge, Juanita rides for help. Diaz and his children hide out in a secret room within the museum. Eric and Ernie pose as dummies, but are discovered by Carillo, who shackles them to a contraption known as the 'giant crusher'. After the duo fail to reveal Diaz's whereabouts (which they do not know), Carillo leaves Eric and Ernie to be killed by the crusher. The children save the duo. The Women's Army arrive, led by Carla, but are forced to retreat. They advance again, but this time wearing only their underwear. Carillo's mesmerised soldiers ignore orders to shoot. Carla's army occupy the museum. Carillo attempts to take Eric and Ernie hostage, but they outsmart him and he is captured.

Carla, now president, promises there will be no more war or tyranny. She proclaims the Women's Republic of Parazuellia. Eric and Ernie happily remain with the Women's Army.