Security officer John Brown is a security guard, who one day dreams of becoming a real Police Officer. In the meantime, he is charged with guarding a science lab operated by Brenda Bradford, and her father. One evening, a break-in occurs, in which a top-secret robotics project is stolen, and Brenda's father is killed. John gives pursuit of the getaway vehicle, which houses famed millionaire Sanford Scolex, and his assistant, Sikes. The chase lead to both vehicles being damaged, with Scolex tossing an exploding cigar into John's car. The ensuing explosion blows a bowling ball out of John's car, and into Scolex's limo, crushing his hand. John's injuries are numerous, and Brenda wishes to apply the 'Gadget program' that she and her father were working on, to help mend John.
John is then outfitted with a number of different gadgets, that leads to at first be terrified, until Brenda explains that his new and improved self can help make a difference in people's lives. Brenda helps Gadget get acclimated with his new self, and explains about the advanced control chip that powers his body. Without it, John would not be able to function. Brenda also provides Gadget with a jive-talking vehicle, dubbed The Gadgetmobile. Meanwhile, Scolex has had an assistant named Kramer, fashion a claw-like arm in place of his crushed hand, and considers changing his name to 'Claw. ' The item that they stole from the Bradford's lab (a robotic foot) proves unable to respond to Kramer and Sike's tinkering, leading Scolex to think that something extra must be needed to make it work.
Gadget is first made known by the City's Mayor, and Police Chief Quimby. Even though Gadget is assigned to the Police, Quimby still dislikes the idea of a machine being shoehorned into his department, and relegates Gadget to community projects...
like rescuing cats from trees. After the announcement, a gala celebration is held, wherein Gadget accompanies Brenda to the festivities. At the event, Scolex appears, and offers Brenda her own facilities and funding. Though Gadget reminds her of her and her Father's work on the 'Gadget Program,' Brenda gladly accepts Scolex's offer, unaware of his plans to steal her technological ideas and designs.
Gadget is also upset that he is not being taken seriously, and sets out to find out who killed Brenda's father, with the help of his niece Penny, and her dog Brain. A mechanical piece at the scene of the crime contains the initials 'SI,' leading Gadget to Scolex Industries. In the meantime, with Brenda working for him, Scolex has stolen several of her ideas, and crafted two robotic clones of his own: one a bimbo-like clone of Brenda, and another that is an evil clone of Inspector Gadget. While Scolex keeps Brenda's clone for himself, Robo-Gadget is sent out to terrorize the public.
Gadget manages to break into Scolex's facility, but is captured when he tries to recover the robotic foot stolen from Brenda's lab. Gadget is then eliminated when Scolex has the 'Gadget Chip' destroyed, leaving his assistant Sikes to dump Gadget at the City Dump. In the aftermath, Robo-Gadget goes on a mad rampage, prompting Brenda and Penny to try and find the real Gadget. Using the Gadgetmobile, they find him in the dump, but without the chip. However, due to Gadget's caring and emotions, he manages to start back up, and everyone decides to go after Scolex. After dropping off Penny and Brain at home, Brenda and Gadget find Scolex's limo, containing both Scolex and Robo-Gadget. Gadget wrestles Robo-Gadget into the streets, and the two have a battle until Gadget finally wins.
Gadget activiates his Gadgetcopter, and heads to Scolex's building, in time to see him flying away with Brenda. Gadget manages to disable the helicopter, and safely recovers Brenda. In the aftermath, Scolex and his assistant Sikes are arrested for the murder of Brenda's father, and as the Police arrive, Quimby acknowledges Gadget as an actual member of the police force. As Scolex is led away, he vows to get Gadget 'next time,' as the Inspector and Brenda head off..