The Griswold family competes in a game show called Pig in a Poke and wins an all-expenses-paid trip to Europe. In a whirlwind tour of Western Europe, chaos of all sorts ensues.
They stay in a sordid London hotel with a sloppy, tattooed Cockney desk clerk. While in their English rental car, a yellow Austin Maxi, Clark's tendency to drive on the wrong side of the road causes frequent accidents, including knocking over a bicyclist they have many run-ins with. Later, Clark drives the family around the busy Lambeth Bridge roundabout for hours, unable to maneuver his way out of the chaotic traffic. At Stonehenge, Clark accidentally backs the car into an ancient stone monolith, toppling all the stones like dominoes, which they do not even notice as they happily leave the scene.
In Paris, the family's camcorder is stolen by a passerby whom Clark had asked to take a picture of the family. Clark is also mocked by a French waiter for his terrible French, though he does not realize it. The family wears stenciled berets, causing Rusty to be teased by young women at the Eiffel Tower observation deck. Clark offers to get rid of the beret for Rusty, but when he throws it away, another visitor's dachshund mistakes it for a Frisbee and jumps off the tower after it, landing safely in a nearby fountain. Later, Clark and Ellen visit a bawdy Paris can-can dance show, finding Rusty already there with a prostitute.
Next in a West German village, the Griswolds burst in on a bewildered elderly couple, who they mistakenly think are relatives but the couple ends up providing them dinner and lodging anyway, each family not being able to understand the other's language. Clark turns a lively Bavarian folk dance stage performance into an all-out street brawl, after which, while fleeing, he hastily knocks down several street vendors' stands and gets their Citroën DS stuck in a narrow medieval archway.
In Rome, the Griswolds rent a car at a travel office, but unknown to them, the men in charge are thieves, holding the real manager captive. The lead thief gives them a car with the manager in the trunk, claiming he lost the trunk keys. The next day, Ellen is shocked to discover that private, sexy videos of her from the family's stolen camcorder have been used in a billboard advertising porn, leaving her completely humiliated. After screaming angrily at Clark (who had told her he had erased the video), Ellen storms off to their hotel where she encounters the thief who rented them the car. She confesses her recent troubles, still unaware that he is a criminal. The man then tries to get the car keys, which are in her purse, but fails. When the police arrive at the hotel, he kidnaps Ellen and takes her away in the Volkswagen Beetle. Clark chases the thief all over Rome until he ends it up in a fountain. The police arrest the thief.
On the flight home, Clark tries to find a WC but falls into the pilot's cockpit and accidentally causes the plane to go directly down and knock the Statue of Liberty's torch upside down as Russell says "Yep, the Griswolds are back".
The Griswolds:
Chevy Chase as Clark Griswold, the patriarch of the Griswald family
Beverly D'Angelo as Ellen Griswold, the wife of Clark
Dana Hill as Audrey Griswold, the daughter of Clark and Ellen; She was portrayed by Dana Barron in the previous film
Jason Lively as Russell "Rusty" Griswold, the son of Clark and Ellen; He was portrayed by Anthony Michael Hall in the previous film
Characters in America:
John Astin as Kent Winkdale, the host of Pig in a Poke
Paul Bartel as Mr. Froeger, the patriarch of the Froeger family that competed against the Griswalds on Pig in a Poke
Cynthia Szigeti as Mrs. Froeger, the wife of Mr. Froeger
Malcolm Danare as Moe Froeger, the son of Mr. and Mrs. Froeger
Kevi Kendall as Ruth Froeger, the daughter of Mr. and Mrs. Froeger
William Zabka as Jack, Audrey's boyfriend
Sheila Kennedy as the Game Show Hostess #1.
Gary Owens as the voice of Johnny (uncredited), the announcer of Pig in a Poke[4]
Characters in England:
Jeannette Charles as Queen Elizabeth II, the Queen of The United Kingdom who appears in Ellen's dream sequence.
Peter Hugo as Prince Charles, the son of Queen Elizabeth II who appears in Ellen's dream sequence.
Julie Wooldridge as Princess Diana, the wife of Prince Charles who appears in Ellen's dream sequence.
Mel Smith as a London hotel manager
Robbie Coltrane as a man in the bathroom
Maureen Lipman as a lady in the bed
Paul McDowell as First English motorist
Ballard Berkeley as Second English motorist
Eric Idle as The Bike Rider, an unnamed bike rider with whom the Griswalds have several accidental encounters all over Europe
Derek Deadman as Taxi Driver
Characters in France:
Jacques Herlin as a French hotel desk clerk
Sylvie Badalati as Rusty's French girl
Characters in Germany:
Willy Millowitsch as Fritz Spritz, the supposed relative of Clark
Erika Wackernagel as Helga Spritz, the wife of Fritz and a supposed relative of Clark
Claudia Neidig as Claudia, Rusty's German girl
Characters in Italy:
Victor Lanoux as The Thief, an unnamed criminal who took over a travel office
Massimo Sarchielli as The Other Thief, the unnamed accomplice of the unnamed thief
Moon Unit Zappa as Rusty's California girl