Clark Griswold, wanting to spend more time with his wife Ellen and children Rusty and Audrey, decides to lead the family on a cross-country expedition from the Chicago suburbs to the southern California amusement park Walley World, billed as "America's Favorite Family Fun Park". Ellen wants to fly, but Clark insists on driving, so he can bond with his family. He has ordered a new car in preparation for the trip, but the dealer claims that it will not be ready for six weeks. Clark is forced to buy the "Wagon Queen Family Truckster", an ugly, oversized station wagon, after the car he brought to trade in has been hauled away and crushed.
During the family's travels, they experience numerous mishaps, such as being tagged by vandals in St. Louis, Missouri. Clark aggravates a bartender in Dodge City, Kansas and is tantalized on numerous occasions by a beautiful young woman driving a flashy red Ferrari 308 GTS.
They stop in Coolidge, Kansas to visit Ellen's cousin Catherine and her husband Eddie, who foist cranky Aunt Edna and her mean dog Dinky on the Griswolds, asking them to drop her off at her son Norman's home in Phoenix.
After stopping at a decrepit and dirty campground in South Fork, Colorado for the night, Clark forgets to untie Dinky's leash from the rear bumper before driving off the next morning, killing the dog. A motorcycle cop pulls the Griswolds over and angrily lectures Clark over animal cruelty, but accepts Clark's apology. Edna learns of her dog's death and becomes more irate with Clark. Exiting Colorado, Ellen loses her bag which had her credit cards and Clark reports them as lost.
While Ellen and Clark argue during a drive between Utah and Arizona, they crash and become stranded in the desert near Monument Valley. Clark and Rusty have a bonding experience explaining why Clark wants to take this vacation. After setting off alone in the desert to look for help, Clark eventually reunites with his family, who have been rescued and taken to a local mechanic. The mechanic extorts Clark's remaining cash only to render the car barely operational. Frustrated, they stop at the Grand Canyon. When Clark is unable to convince a hotel clerk to cash a personal check because his credit cards have mistakenly been reported lost, he raids the cash register behind the clerk's back and leaves the check.
Leaving, they find that Aunt Edna has died in her sleep. They tie her corpse to the roof of the car, wrapped in a tarpaulin. Discovering that Norman is out of town when they arrive at his home, they attach a note to the corpse and leave it in his backyard. Ellen becomes annoyed at Clark's hasty, halfhearted attempt at a eulogy.
Overwhelmed by the mishaps they have encountered during the road trip, Ellen and the children want to go back home, but Clark has become obsessed with reaching Walley World and they continue on. After an argument with Ellen, Clark eventually meets the Ferrari-driving blonde at a hotel bar. After convincing the woman that Clark owns the motel chain, he goes skinny-dipping with her in its pool, but they are discovered by the family before anything intimate happens due to Clark’s loud remarks about the cold temperature. Clark eventually tells the woman the truth, and she leaves him understandingly. Clark later lies to Russ while trying to explain himself, explaining that the woman was just a waitress. Ellen forgives Clark and they go skinny-dipping themselves.
Despite the family's misfortunes, they finally arrive at Walley World the next day only to discover the park closed for the next two weeks for repairs. Finally slipping into madness and realizing that all his efforts have been for nothing, Clark buys a realistic-looking BB gun and demands that park security guard Russ Lasky take them through Walley World. Ellen and the kids follow, attempting to placate Clark. Eventually, an LAPD SWAT team arrives and just as the family is about to be arrested, the park owner Roy Walley appears. Roy understands Clark's impassioned longing to achieve the perfect vacation, bringing back memories of his own family vacation headaches. He decides not to file criminal charges against the Griswolds and lets the family – along with the SWAT team – enjoy the park as his guests.
A montage of snapshots taken during the trip is shown during the credits, ending with one that shows the Griswolds flying back to Chicago.
Chevy Chase as Clark W. Griswold, the patriarch of the Griswold Family.
Beverly D'Angelo as Ellen Griswold, the wife of Clark.
Anthony Michael Hall as Russell "Rusty" Griswold, the son of Clark and Ellen.
Dana Barron as Audrey Griswold, the daughter of Clark and Ellen and the sister of Rusty.
Imogene Coca as Aunt Edna, the aunt of Ellen.
Randy Quaid as Cousin Eddie Johnson, the cousin-in-law of Clark and Ellen.
John Candy as Russ Lasky, a security guard at Walley World.
Christie Brinkley as the Girl in Red Ferrari
Eddie Bracken as Roy Walley, the owner of Walley World.
Brian Doyle-Murray as the Kamp Komfort clerk
Miriam Flynn as Cousin Catherine Johnson, the cousin of Ellen and wife of Eddie.
James Keach as the motorcycle cop
Eugene Levy as Ed, the car salesman.
Frank McRae as Grover, a security guard at Walley World.
Jane Krakowski as Cousin Vicki Johnson, the daughter of Eddie and Catherine.
John P. Navin Jr. as Cousin Dale Johnson, the son of Eddie and Catherine and brother of Vicki.
Violet Ramis (daughter of Harold Ramis) as Cousin Daisy Mabel Johnson, the daughter of Eddie and Catherine who was born without a tongue.
Mickey Jones as Mechanic
John Diehl as Assistant Mechanic
James Staley as the hotel clerk
Popeye the Dog as Dinky, a dog owned by Aunt Edna.
Harold Ramis has an offscreen voice cameo as one of the police officers at Walley World and provides the voice of the recorded message from Marty the Moose.