As the future of Average Joe’s hangs by a thread, Peter LaFleur (Ben Stiller) faces a devastating challenge when his archenemy, White Goodman (Vince Vaughn), purchases the gym directly across the street. Goodman aims to shut down Average Joe’s and replace it with a parking structure for his members at Globo Gym unless Peter can somehow gather $50,000 in just 30 days.

In the midst of this turmoil, Goodman tries to charm attorney Katherine “Kate” Veatch (Christine Taylor), who is handling his services. However, her revulsion towards his advances leads her to call out a conflict of interest, turning down his unwelcome affections. With the clock ticking down, Peter enlists the help of his gym staff, including Dwight Baumgarten and Owen Dittman, along with members like Steve “Pirate” Cowan, Justin Redman, and Gordon Pibb, to brainstorm solutions.

Their initial venture—a car wash—yields lackluster results, but inspiration strikes when Gordon suggests they enter a dodgeball tournament in Las Vegas, which boasts a lucrative $50,000 prize. After screening an old training video featuring legendary dodgeballer Patches O’Houlihan, they prepare for an upcoming qualifier.

In an unexpected twist, they are initially bested by Girl Scout Troop 417, but fortune smiles upon them when it’s discovered that one of the scouts was disqualified due to anabolic steroid use. This twist of fate makes Average Joe’s the official winners, much to Goodman’s chagrin, as he rapidly recruits his own team—the Globo Gym Purple Cobras—to take on Peter’s crew.

Gordon is stunned when Goodman reveals he manipulated the system, allowing him to skip qualifying rounds. As the teams prepare for a showdown, Patches—now an elderly man confined to a wheelchair—steps in to coach Peter’s team, employing unorthodox training methods that include dodging wrenches and cars, along with his cheeky insults.

With Kate now firmly aligned with Average Joe’s, the stakes escalate. Tragically, just as they gear up for the championship match, Patches suffers a tragic accident, leaving Peter and the team shattered. Goodman attempts to capitalize on their despair by offering Peter money for Average Joe’s, but Peter knows he must rally his team. A glimmer of hope arrives when Peter runs into Lance Armstrong, who inspires him to reignite his competitive spirit.

However, upon return, they find that Average Joe’s has forfeited the match, leading to a frantic reevaluation of their options. Gordon’s meticulous observations unveil a loophole that allows them a second chance, culminating in Chuck Norris voting to reinstate their eligibility.

As tension builds, Peter faces Goodman in a sudden-death round, drawing upon Patches’ spirited legacy. He boldly decides to play blindfolded, evading Goodman’s blows and ultimately delivering a triumphant strike that claims them the championship and the prize.

Yet, Goodman’s machinations are exposed as he discloses that Peter sold Average Joe’s to him the night prior. Peter, however, reveals his clever strategy of using the prize money to place a massive bet on his own team, netting $5 million in winnings. With Globo Gym being publicly traded, Peter takes the opportunity to buy a controlling share, reclaiming Average Joe’s and firing Goodman in the process.

As news of their victory spreads, Steve embraces his pirate persona once more, while Kate arrives just in time to celebrate, culminating in a passionate kiss with Peter that hints at the start of their romance. Meanwhile, Justin and Amber prepare for married life and parenthood, while Owen finds unexpected love within the Globo Gym ranks.

In the aftermath of their incredible journey, Peter opens youth dodgeball classes in a revitalized Average Joe’s, while Goodman wallows in self-pity, lamenting his fortune and blaming Chuck Norris for his downfall.