In 1912, 13-year-old Indiana Jones is horseback riding with his Boy Scout troop in Moab, Utah. While scouting caves, Indy discovers a group of grave robbers who have found a golden crucifix belonging to Coronado and steals it from them, hoping to donate it to a museum. The men give chase through a passing circus train, leaving Indy with a bloody cut across his chin from a bullwhip and a new phobia of snakes. Indy escapes, but the local sheriff makes him return the crucifix. Impressed with Indy's bravery, the leader of the robbers gives Indy his fedora.
In 1938, two years after Raiders of the Lost Ark, Indy recovers the crucifix off the coast of Portugal and donates it to Marcus Brody's museum. Later, Indy is introduced to Walter Donovan, who informs him that Indy's father, Henry Jones, Sr., has vanished while searching for the Holy Grail, using an incomplete inscription as his guide. Indy then receives Henry's Grail diary via mail from Venice. Realizing that he would not have sent the diary unless he was in trouble, Indy and Marcus travel to Venice, where they meet Henry's Austrian colleague, Dr. Elsa Schneider. Beneath the library where Henry was last seen, Indy and Elsa discover the tomb of a First Crusade knight, which also contains a complete version of the inscription that Henry had used, this one revealing the location of the Grail. They flee, however, when the catacombs are set aflame by the Brotherhood of the Cruciform Sword, a secret society that protects the Grail from evildoers. After a speedboat chase, Indy and Elsa capture one of the Brotherhood, Kazim, and Indy tells him that his goal is only to find his father and that he has no interest in finding the Grail. Kazim tells him that Henry is being held in Castle Brunwald on the Austrian-German border. Marcus later reveals a map drawn by Henry of the route to the Grail, which begins in Alexandretta.
At Castle Brunwald, Indy rescues Henry, but learns that Elsa and Donovan are actually working with the Nazis, and are using him to find the Grail for them. Meanwhile, Marcus is captured in Hatay, Turkey, while waiting with Sallah for the Joneses. The Joneses escape from Castle Brunwald and recover the diary from Elsa at a Nazi rally in Berlin, barely escaping from an accidental face to face encounter with Adolf Hitler, who casually autographs Henry's diary. They board a Zeppelin to leave Germany, but the Zeppelin soon turns around and the Joneses escape in a parasite biplane. They crash while engaging in a dogfight with the Luftwaffe due to Henry's accidentally shooting the plane's tail off, but Henry redeems himself on the ground by alarming a flock of birds to take flight in front of the Luftwaffe fighter causing the pilot to crash.
The two meet up with Sallah in Hatay, where they learn of Marcus's abduction. The Nazis are already moving toward the Grail's location, using the map possessed by Marcus. In exchange for a Rolls-Royce Phantom II, the Sultan of Hatay has given the Nazis full access to his equipment for the expedition, including a large tank. Indy, Henry, and Sallah find the Nazi expedition, which is ambushed by the Brotherhood. During the battle, Henry is captured by SS Colonel Ernst Vogel while attempting to rescue Marcus from the tank; Kazim and his comrades are killed. The younger Jones pursues the tank on horseback and, with the aid of Sallah, saves Henry and Marcus. He is then caught up in a fight with Vogel, and barely escapes before the tank goes over a cliff, crushing Vogel to death.
Indy, Henry, Marcus, and Sallah catch up with the surviving Nazis, led by Donovan and Elsa, who have found the temple where the Grail is kept but are unable to pass through the three protective booby traps. Donovan shoots Henry, mortally wounding him, in order to force Indy to risk his life in the traps to find the Grail and use its healing power to save Henry. Using the information in the diary and followed by Donovan and Elsa, Indy safely overcomes the traps (circular blades, a word puzzle, and an invisible bridge across a bottomless pit), and reaches the Grail's chamber, which is guarded by a knight. He has been kept alive for seven hundred years by the power of the Grail, which is hidden among dozens of fake Grails. The knight explains that they must choose which Grail they think is the real one but warns them to choose wisely because even though the real Grail brings life, all of the fake Grails take life away. Elsa betrays Donovan by deliberately giving him a golden chalice, which causes him to decay into dust upon drinking from it. Indy then uses his expert knowledge to find the true Grail, a plain cup of a carpenter, which the knight warns cannot be taken beyond the great seal at the temple's entrance. Indy fills the Grail with holy water and takes it to Henry, which they give to him to drink along with pouring the rest on his gunshot wound, instantly healing him. Elsa then takes the Grail past the great seal, ignoring and forgetting the knight's warning. The temple begins to rapidly collapse and, even as Indy attempts to save her, Elsa falls to her death into an abyss because she is unable to let go of her obsession with the Grail. Indy nearly suffers the same fate, but is saved by Henry, who convinces him to let it go. While the knight watches them, the Joneses, Marcus, and Sallah then narrowly escape the collapsing temple. Afterwards, Henry reveals the origins of Indy's nickname to the group as the name of the family's former dog before they all ride off into the sunset.
- The Griffin Family (Peter Griffin, Lois Griffin, Meg Griffin, Chris Griffin, and Stewie Griffin), Vinny Griffin, Glenn Quagmire, Cleveland Brown, Joe Swanson, Little Bear, Duck, Cat, Owl, Hen, Emily, Lucy, Doug Funnie, Skeeter Valentine, Belle, Dudley Puppy, Kitty Katswell, Judy Hopps, Nick Wilde, Blythe Baxter, Zoe Trent, Pepper Clark, Penny Ling, Sunil Nevla, Vinnie Terrio, Minka Mark, Russell Ferguson, Gail Trent, and Mitzi guest star in this film.
- Ernie the Giant Chicken, Sideshow Bob, Bobby Briggs, James Woods, The Dazzlings, Bellwether, Gaston, and Team Galactic (Mars, Jupiter and Saturn) will work for Walter Donovan in this film.
- The storyline continues in Brian and the Eeveelution Family's Adventures of Indiana Jones and the Kingdom of the Crystal Skull.