For years, the North African Republic of Wadiya has been ruled by Admiral General Haffaz Aladeen, a childish, tyrannical, lecherous, misogynous, anti-western and antisemitic despot who surrounds himself with female bodyguards, sponsors al-Qaeda and is working on developing nuclear weapons to attack Israel. After the United Nations Security Council resolves to intervene militarily, Aladeen travels to the UN Headquarters in New York City to address the council.
Shortly after arriving, he is kidnapped by Clayton (John C. Reilly), a hitman hired by his treacherous uncle Tamir (Ben Kingsley), who wishes to take power. Tamir then replaces Aladeen with a mentally challenged political decoy named Efawadh, whom he intends to manipulate into signing a document nominally democratizing Wadiya while opening the country's oil fields to Chinese and other foreign vested interests. Aladeen escapes after Clayton accidentally burns himself to death, but his huge beard has been shaved off by Clayton, making him practically unrecognizable.
Wandering through New York, Aladeen encounters Zoey (Anna Faris), a boyish activist who offers him a job at her alternative lifestyle co-op. Aladeen refuses the offer and encounters "Nuclear" Nadal (Jason Mantzoukas), the former chief of Wadiya's nuclear weapons program and head procurer of women, whom Aladeen thought he had previously executed. After Aladeen follows him to New York's "Little Wadiya" which is populated by refugees from his country and includes the Death to Aladeen Restaurant, Nadal explains that Wadiyan resistance was sending into exile all the people he had ordered to be executed. Wanting his old job back, Nadal promises to help Aladeen thwart Tamir's plot and regain his position as 'rightful' dictator, on condition that Aladeen makes him head of Wadiya's WMD program again. Aladeen agrees and accepts Zoey's job offer, as she is catering at the hotel where the signing is to occur. Aladeen grows closer to Zoey after she refuses his sexual advances and teaches him how to masturbate, and eventually falls in love with her after seeing her angry. Turning around Zoey's struggling business, Aladeen begins imposing strict schedules on everyone, forming a personality cult around Zoey and intimidating an inspector into giving the store a good review.
However, Aladeen's relationship with Zoey becomes strained after he reveals his true identity. After acquiring a new beard taken from a corpse, Aladeen infiltrates the hotel and tells Efawadh to leave. At the signing ceremony, he tears up Tamir's document in front of the UN delegation, and holds an impassioned speech praising the virtues of dictatorship, drawing unintended parallels to current issues within the United States. However, upon seeing Zoey in the room, he declares his love for her and, knowing Zoey's strongly held views, vows to democratize his country and open up Wadiya's oil fields for business, but in a way where the general populace will benefit. Angry with Aladeen staying in power, Tamir attempts to assassinate him but Efawadh jumps in front of the bullet and survives, as it is his job "to be shot in the head".
A year later, Wadiya holds its first democratic elections, although they are rigged in favor of Aladeen (having now added the titles President Prime Minister to his previous Admiral General). Afterwards, he marries Zoey, but is shocked when she crushes a glass and reveals herself to be Jewish. Scenes during the credits show Aladeen's convoy, now consisting of eco-friendly cars, visiting a reinstated Nadal, and later Zoey revealing in a television interview that she is pregnant with the couple's first child. Aladeen responds to the news by asking if Zoey is having "a boy or an abortion".
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