In AD 932, King Arthur and his squire, Patsy, travel throughout Britain searching for men to join the Knights of the Round Table. Along the way, he recruits Sir Bedevere the Wise, Sir Lancelot the Brave, Sir Galahad the Pure, Sir Robin the Not-Quite-So-Brave-as-Sir-Lancelot, and Sir Not-Appearing-in-this-Film, along with their squires and Robin’s troubadours. Arthur leads the men to Camelot, but upon further consideration (thanks to a musical number) he decides not to go there because it is “a silly place”. As they turn away, God (an image of W. G. Grace) speaks to them and gives Arthur the task of finding the Holy Grail.
Searching the land for clues to the Grail’s location, Arthur and his men come to a castle occupied by rude French soldiers who claim to have the Grail and insult the Englishmen. After being driven back by a shower of catapulted barnyard animals, Bedevere comes up with a plan to sneak in using a Trojan Rabbit, but they mishandle its execution when they forget to hide inside it, and are forced to flee when the Rabbit is flung back at them. Arthur decides that the knights should go their separate ways to search for clues to the Grail’s whereabouts. A modern-day historian filming a documentary describing the Arthurian legends is abruptly killed by an unknown knight on horseback, triggering a police investigation.
On the knights’ travels, Arthur and Bedevere are given directions by an old man in Scene 24 and attempt to satisfy the strange requests of the dreaded Knights Who Say “Ni!”. Sir Robin avoids a fight with a Three-Headed Knight by running away while the heads are arguing. Sir Galahad is led by a grail-shaped beacon to Castle Anthrax, populated by 150 nubile young women, but to his chagrin is “rescued” by Lancelot. Lancelot, after receiving an arrow-shot note from Swamp Castle believed to be from a lady being forced to marry against her will, rushes to the castle and slaughters nearly the entire wedding party, only to discover that the note was sent by an effeminate prince whose father had arranged the marriage.
Arthur and his knights regroup and are joined by three new knights as well as Brother Maynard and his monk brethren. They meet Tim the Enchanter, who directs them to a cave where the location of the Grail is said to be written. The entrance to the cave is guarded by the Rabbit of Caerbannog. Fatally underestimating its lethal prowess, the knights attack the Rabbit, which easily kills Sirs Bors, Gawain and Ector. Arthur uses the “Holy Hand Grenade of Antioch”, provided by Brother Maynard, to destroy the creature. Inside the cave, they find an inscription from Joseph of Arimathea, directing them to the Castle of Aarrgh (the name presumably the result of Joseph dying whilst carving the inscription).
After barely escaping a giant animated monster that devours Brother Maynard (because the animator has a heart attack, which ends the beast’s existence), they arrive at the Gorge of Eternal Peril. As they approach the Bridge of Death, the man from Scene 24 challenges them to correctly answer three questions to pass – or be cast into the Gorge. Lancelot goes first, easily answers three simple questions and crosses over. Robin is surprised by an unexpectedly difficult question, and Galahad misses the answer to an easy one, and both are flung off the bridge. During Arthur’s turn, he responds to the bridge-keeper’s last question with a question of his own which stumps the bridge-keeper. As a result, the man from Scene 24 is thrown into the gorge, and Arthur and Bedevere cross.
When Arthur and Bedevere reach the bridge’s end, they cannot find Lancelot, unaware he has been arrested by the police investigating the historian’s death. Arthur and Bedevere eventually reach the Castle of Aarrgh, only to find it occupied by the same French soldiers who taunted them before. After being driven to retreat by showers of manure, they amass a large army of knights and prepare to assault the castle. Just as they are charging in to attack, a large force of police shows up, arrests Arthur and Bedevere for the historian’s death and shuts down the film’s production. The movie ends with one of the officers breaking the camera.