In a picturesque Alpine resort, notorious jewel thief Sir Charles Lytton, also known as "The Phantom," sets his sights on the priceless Pink Panther diamond, owned by Princess Dala of Lugash. Disguised as a playboy, Charles charms the princess while plotting to steal her valuable gem. Meanwhile, bumbling yet diligent French police inspector Jacques Clouseau is hot on the Phantom's trail. Clouseau, completely unaware that his own wife, Simone, is Charles' lover and accomplice, remains confident in his ability to finally capture the elusive thief. Oblivious to Simone's secret, he carefully monitors the high-society guests, hoping to unmask the Phantom and recover the Pink Panther diamond.

As a series of comedic misadventures unfold, Clouseau becomes increasingly entangled in a web of intrigue and mistaken identities. Charles' ne'er-do-well nephew, George, arrives with his own ambitions, complicating matters further. Clouseau’s bungling efforts continuously foil Charles' schemes, leading to a hilarious and chaotic pursuit.