Stan Marsh, Kyle Broflovski, Kenny McCormick, and Eric Cartman go to a theatre to see Asses of Fire, which stars the boys’ favorite Canadian comedy duo Terrance and Phillip. However, the boys are refused entry due to the film strictly being R-rated, so they pay a homeless man to accompany them.
Immediately after the movie, the boys begin swearing everywhere they go. The other children are impressed and all see the movie as well – except for Wendy Testaburger, the girl Stan likes, who spends her time with brilliant exchange student Gregory. The children swear profusely in school the next day, which infuriates their teacher Mr. Garrison and leads to their mothers finding out. The children are forbidden from seeing the movie again, but after attending a class with school counselor Mr. Mackey that “cures them”, they sneak out and see it again anyway. Afterwards, Cartman bets Kenny $100 that he can’t set his fart on fire like Terrance in the film – his attempt goes too far and he sets himself on fire and a dump truck pours salt all over him. Kenny is rushed to the hospital where Dr. Doctor and the doctors try their best to bring him back to life, but they accidentally replace his heart with a baked potato, which explodes, killing him. Upon learning that their sons saw the movie again, their mothers ground Kyle and Stan for two weeks, and Cartman three weeks, while Kenny is sent to Hell for various naughty deeds (skipping church, profanity, throwing rocks at a bird, staring at boobs all day, etc.). He is tormented by Satan and his new partner, the recently deceased Saddam Hussein. Kenny learns that Saddam and Satan are lovers that have a dysfunctional relationship, and Saddam dominates and demeans Satan.
Back on Earth, Kyle’s mother, Sheila, leads the parents of South Park in a campaign against Terrance and Phillip, as well as the whole nation of Canada. Terrance and Phillip are then arrested on the Conan O’Brien Show as war criminals. When the United States refuse to release the duo, Canada retaliates by bombing the residence of the Baldwin brothers. Sheila and President Bill Clinton announce that the United States will go to war with Canada and have Terrance and Phillip executed at a USO show. After she overhears Cartman degrading her in a song, Sheila has Dr. Vosknocker implant him with a V-Chip, a device that administers an electric shock every time he swears. In Hell, Kenny hears Satan declare that the war is a sign of the Apocalypse and that when the blood of two innocent Canadians touches American soil, he will invade Earth. Kenny attempts to persuade Satan to abandon Saddam, but to no avail. A ghostly Kenny visits Cartman to warn him. Unable to reason with their mothers, the three boys form La Résistance, partly so that Stan can win over Wendy as well as free Terrence and Philip. Gregory takes charge of the group and develops a rescue plan. He tells Marsh to recruit a God-hating French-accented boy expert on covert operations named “The Mole.”
La Résistance infiltrate the USO show using the Mole’s expertise, but Kenny’s ghost scares Cartman again and he forgets to deactivate the alarm. The Mole is discovered and killed by guard dogs, so the remaining boys attempt to warn their mothers about the prophecy and an attack by Satan and Saddam. They are laughed off, and Terrence and Philip’s electric chairs are activated. The Canadian Army attacks the show and a battle ensues between the two armies. In the chaos, the boys are able to free Terrance and Phillip – in the process, Cartman is electrocuted briefly and his V-chip begins to malfunction. The mothers, seeing the destruction their movement has incited, decide to give up and look for their children, leaving only Sheila clinging to the cause.
After receiving a confidence-boosting vision from “The Clitoris”, Stan leads the kids to Terrance and Phillip, who have been cornered by the United States Army. La Résistance forms a human shield while Kyle tries to persuade the soldiers and stands up to his mother against the killing. The soldiers begin to back down, but Sheila refuses and shoots Terrance and Phillip anyway, which results in Satan, his minions, and Saddam emerging from a fiery portal and slaughtering at will, invincible to retaliation, with Satan personally telling Sheila just how badly she screwed up. Because of all this, Sheila finally begins to regret everything, claiming that she was only trying to make the world a better place for children. Saddam successfully cows Satan once again and makes everyone bow to him as the lord of the Earth. However, when he insults Cartman, Cartman swears and a bolt of energy shoots through his pointing finger and kills a minion. Realizing his newly acquired power, and with Kyle’s encouragement, Cartman starts using profanity to power himself up and shoot electrical bolts at Saddam. Saddam continues to demean Satan and boss him around throughout this, which finally causes Satan to snap and throw him back into Hell, where he is impaled and killed on a stalagmite.
Satan then thanks Kenny for supporting him and grants him one wish; Kenny asks for everything to return to how it was before the war, even though it means he will have to go back to Hell. He takes off his hood, revealing his face, and says goodbye to his friends. Everything returns to normal in South Park. Sheila apologizes to Kyle for not listening to him, Wendy dumps Gregory and goes back to Stan and instead of returning to Hell, Kenny ascends to Heaven due to his act of sacrifice.
In the post-credit scene, Ike eats a rat while waiting for his family to come home.