Blues vocalist and petty criminal “Joliet” Jake Blues is paroled on good behavior grounds from Joliet Correctional Center after serving three years of a five-year sentence, and is picked up by his blood brother Elwood in his Bluesmobile, a battered, decommissioned police car. Elwood demonstrates its capabilities by jumping an open drawbridge. The brothers visit the Roman Catholic orphanage where they were raised, and learn from Sister Mary “the Penguin” Stigmata and old friend Curtis that it will be closed unless $5,000 in property taxes is collected. Jake offers to steal the money, but Sister Mary is offended. During a sermon by the Reverend Cleophus James at the Triple Rock Baptist Church, Jake has another idea: they can re-form their band, the Blues Brothers, which disbanded while Jake was in prison, and raise the money to save the orphanage.
That night, state troopers attempt to arrest Elwood for driving with a suspended license. After a high-speed chase through the Dixie Square Mall, the brothers flee to the flophouse where Elwood lives, miraculously escaping a rocket launcher attack by a mysterious woman. The next morning, as the police arrive at the house, the woman detonates a bomb that demolishes the building, but somehow leaves Jake and Elwood unharmed, and saves them from being apprehended.
Jake and Elwood begin tracking down members of the band. Five of them are playing a Holiday Inn lounge as “Murph and the Magic Tones,” and quickly agree to rejoin. The sixth member, “Mr. Fabulous”, turns them down as he is the maître d’ at expensive restaurant “Chez Paul”, but the brothers behave obnoxiously in the restaurant until he relents. On their way to meet the final two band members, the brothers find the road through Jackson Park blocked by an “American Socialist White People’s Party”—”the Illinois Nazis”—demonstration on a bridge. It is mentioned that “The Nazis” won their court case, likely a reference to The Skokie Affair. Elwood runs them off the bridge, forcing them to jump into the East Lagoon. The commander orders a subordinate to record the car’s license number. Meanwhile, the last two band members, Matt “Guitar” Murphy and “Blue Lou” Marini, who now work in a soul food restaurant, rejoin the band against the advice of Murphy’s wife and restaurant owner, Aretha Franklin. The reunited group obtain instruments and equipment from Ray’s Music Exchange in Calumet City, and Ray, “as usual”, takes an IOU.
As Jake attempts to book a gig, the mystery woman blows up the phone booth he and Elwood are using; once again, they are miraculously unhurt. The band stumbles into a gig at Bob’s Country Bunker, a local honky-tonk. They win over the rowdy crowd, but run up a bar tab higher than their pay, and infuriate the country band that was actually booked there, the Good Ole Boys.
Realizing that they need one big show to raise the necessary money, the brothers persuade their old agent to book the Palace Hotel Ballroom, north of Chicago. They mount a loudspeaker atop the Bluesmobile and drive the Chicago area promoting the concert, but in the process alert the police, the Nazis, and the Good Ole Boys of their whereabouts. The ballroom is packed with blues fans, cops, and the Good Ole Boys. Jake and Elwood perform two songs, then sneak offstage, as the tax deadline is rapidly approaching. A record company executive offers them a $10,000 cash advance on a recording contract—more than enough to pay off the orphanage’s taxes and Ray’s IOU—and then shows them how to slip out of the building unnoticed. As they make their escape via a service tunnel, they are confronted by the mystery woman: Jake’s vengeful ex-fiancée. After her volley of M16 rifle bullets leaves them miraculously unharmed, Jake offers a series of ridiculous excuses that she accepts, allowing the brothers to escape to the Bluesmobile.
Jake and Elwood race back toward Chicago with dozens of state/local police and the Good Ole Boys in pursuit. They eventually elude them all with a series of improbable maneuvers, including a miraculous gravity-defying escape from the Illinois Nazis. At the Richard J. Daley Center, they rush inside the adjacent Chicago City Hall building, soon followed by hundreds of police, state troopers, SWAT teams, firefighters, Illinois National Guardsmen, and the Military Police. Finding the office of the Cook County Assessor (played by Steven Spielberg), the brothers pay the tax bill. Just as their receipt is stamped, they are arrested by the mob of law officers. In prison, the band plays “Jailhouse Rock” for the inmates.