The film starts in an arctic location. CEO Victoria Kord (Susan Sarandon) of Kord Industries arrives to meet her henchman, Ignacio Carapax (Raoul Max Trujillo) and lead scientist that she misnames Dr. Sanchez (Harvey Guillen). Her crew is mining to uncover the Scarab, an item that Victoria has long been searching for.
Elsewhere, Jaime Reyes (Xolo Maridueña) returns home to Palmera City after graduating college. He is joined by his parents, Alberto (Damian Alcazar) and Rocio (Elpidia Carrillo), sister Milagro (Belissa Escobedo), grandmother Nana (Adriana Barraza), and Uncle Rudy (George Lopez). After taking him out for celebratory tacos, Milagro drops some news on Jaime. First, the family is in danger of losing the house since the rent has increased, and Jaime also learns that Alberto recently suffered a heart attack. Despite their problems, the family resolves to do the best they can to stay afloat.
Jaime joins Milagro working at Victoria’s mansion. He sees Victoria and wants to introduce himself since he knows of her work. Jaime then sees as Victoria and Carapax are confronted by Jenny Kord (Bruna Marquezine), Victoria’s niece and daughter of Ted, Victoria’s brother who mysteriously disappeared, leaving Victoria to take over his company. Jenny is upset that Victoria wants to reactivate the OMAC (One Man Army Corp) project that her father had shut down years ago. When Carapax gets too close to Jenny, Jaime steps in, just as Milagro is done using a private bathroom, resulting in Victoria having both of them fired. However, Jenny gives Jaime her number to interview about another job at Kord Industries. Jaime later has a heart-to-heart with Alberto over his future and in regards to the family, which encourages Jaime to take Jenny up on her offer.
The next day, Jenny sneaks into the labs at Kord Industries and finds that Victoria is using the Scarab in her experiments. Fearing something dangerous may come from this, she steals it and sneaks it away in a fast food container. Dr. Sanchez sees that the Scarab is missing and orders the building locked down. Jaime is in the building waiting to see Jenny until he finds her coming down the elevator. While she is trying to get out quickly, Jaime says he will do whatever she needs, so she gives him the container with the Scarab and tells him to not open or touch what is inside, and to guard it with his life.
Jaime brings the Scarab home to his family. Despite telling them otherwise, they goad him into opening it and seeing the Scarab up close. After goofing around with it, the Scarab activates in Jaime’s hand and begins crawling before lunging at his face and then entering his body. It begins to painfully form a suit around Jaime’s body before launching him into the sky. A voice from the suit, Khaji-Da (Becky G), speaks to Jaime as the suit tests its capabilities, sending a terrified Jaime all across the city flying, as well as unintentionally causing damage, like splitting a bus in half to avoid him getting hit. Eventually, the suit brings Jaime back home while his family is freaked out. While they want to call the police, Rudy tells them not to because cops will come down hard on their family, especially since it is implied that he, Alberto and Nana are undocumented.
Jaime goes to find Jenny as she is fleeing Kord Industries, being pursued by Victoria’s armed goons. Jaime drives Rudy’s truck back home (and he is pissed to find it riddled with bullet holes) and brings Jenny with him. She explains to the family what the Scarab is and how it must have chosen Jaime to be its host. The family doesn’t trust Jenny due to her being a Kord and seeing them as not caring about people like them, but Jaime has faith in her ability to remove the Scarab.
Jenny brings Jaime and Rudy with her to Kord Industries so that she can grab a smartwatch. Before they can leave, Carapax shows up, wearing an OMAC prototype suit. He attempts to attack them, but Jaime’s suit activates and goes into defense mode. Khaji-Da takes over for Jaime and utilizes an arsenal of weapons to fight back. When Jaime has Carapax down for the count, Khaji-Da attempts to use lethal force, but Jaime says he is not a killer. Carapax gets back on his feet and almost kills Jaime, saying that his love for his family makes him weak, but Rudy and Jenny use the truck to launch something heavy to knock Carapax down and get Jaime out safely.
Jenny then brings the two to her old childhood home. She uses the smartwatch to take them to Ted’s laboratory, where Rudy recognizes his suits as belonging to the old superhero known as the Blue Beetle. There is also a suit that belonged to Ted’s predecessor, Dan Garrett, who passed the mantle down to Ted, who built his own tech since Khaji-Da didn’t choose him like she did Dan and Jaime. Rudy then learns that there is no way to remove the Scarab from Jaime unless he is dead. It has become symbiotic and will remain in him to protect him. Afterwards, Jenny and Jaime talk privately, where she discusses the death of her mom and her father’s disappearance, and how lucky Jaime is to have his family. They nearly kiss until Rudy comes in to ruin the moment.
From outside, Jenny sees a helicopter belonging to Victoria heading toward Palmera City, and Jaime knows it means they are going after his family. He leaps off the roof so that the suit can come out and help him fly there. Sure enough, Victoria’s goons show up and forcefully bring the family outside while she is flying up above, waiting for Jaime to appear. In the commotion, a fire begins to spread inside the house. Jaime arrives and utilizes non-lethal weaponry to fight back against the goons. While Nana and Rocio get away, two goons try to apprehend Milagro and Alberto. Jaime knocks them off his family, but Alberto begins to suffer cardiac arrest. Carapax uses a grappling hook to latch onto Jaime and incapacitate him. Victoria takes Jaime with him while he can only watch his father die, and the rest of his family weeps over him while their house starts to go up in flames.
In the aftermath, the Reyes family is left mourning Alberto and the loss of their house, but Nana tells them they need to put their sadness aside for now and go out to rescue Jaime. Jenny brings the family back to Ted’s lab so that they can use a beetle-shaped airship and fly to an island where Victoria is conducting her experiments. She also gives the family access to Ted’s weapons, including a huge minigun that Nana gets her hands on (she had training from being a revolutionary).
Victoria puts Jaime to a machine that siphons the Scarab’s powers to transfer to Carapax’s OMAC suit. Dr. Sanchez goes through with it despite knowing Jaime could be killed. Meanwhile, the family and Jenny crash-land the ship onto Victoria’s base, and Rudy navigates the ship to stomp through her guards. Jenny then brings Milagro down with her to go look for Jaime, and Milagro uses a weapon that can project a shield and fist to help her. They then find that Victoria is planning to build thousands of OMACs to use in warfare. During the experiment, Jaime starts to lose consciousness and finds himself in a realm between life and death, where he sees Alberto and gets confirmation that he is gone. Despite Jaime being ready to join him, Alberto tells him he has to embrace his destiny, because he is now the Blue Beetle. Jaime says goodbye to Alberto and jumps toward an image of his suit, touching its finger so that the Scarab can synchronize with his brain.
Just as the transfer finishes and Carapax gets his own bodysuit, Jenny detonates a bomb that shuts off the systems, allowing Jaime to be freed. Dr. Sanchez (whose real name is Jose De La Cruz) helps Jaime escape after having had enough of Victoria, but he gets killed by Carapax. Jaime runs and beats up more guards, along with help from Nana (who mows them down with the minigun) and Milagro. Carapax catches up to them and engages in a rematch with Jaime. Now that he and the Scarab are one, Jaime is able to use his weapons in the fight, but he becomes enraged when he sees Carapax firing at Rudy. Jaime manages to overpower Carapax and prepares to deal a killing blow until Khaji-Da stops him, showing Jaime the memories she scanned off Carapax. It is shown that Carapax lost his mother as a child when bombs dropped by Kord Industries fell on his village, and Victoria recruited him as a child soldier and performed experimental enhancements on him to make him her weapon. Jaime stops and helps Carapax on his feet, then telling him that his love for his family makes him strong.
Victoria attempts to escape in a helicopter with a captured Jenny, but she uses gum that Ted invented to cause the helicopter to crash with them falling back onto the island. Khaji-Da then tells Jaime that Carapax is overloading the OMAC core in his suit, which will cause the entire island to blow up. Victoria orders Carapax to kill the Reyes family, but he is done with her and begins dragging her towards the inevitable explosion, as he sees a vision of his mother beckoning him to return to her. Jaime flies up onto the airship to join the family as the island, and the rest of the OMAC suits and Victoria and Carapax, are obliterated. The family then takes a moment to cry for Alberto, with Jenny joining them.
Days later, Jenny takes over as CEO for Kord Industries and announces they will no longer produce weapons. The Reyes family holds a funeral for Alberto, but when they return home, the neighborhood shows up with food and drinks to show support for them. The family vows to work together to rebuild their lives, but Jenny shows up and tells them that Kord Industries will replace their home. She and Jaime walk off together, with her telling him that she will go back to her father’s house. Jaime offers to give her a lift. They kiss, and the family cheers them on before Jaime activates his Blue Beetle suit, blasting off into the sky with Jenny.
Mid-Credits Scene: A video transmission in Ted’s laboratory plays from Ted himself (PROBABLY played by Jason Sudeikis), calling out to Jenny to let her know he is still alive.
Post-Credits Scene: A stop-motion animation clip of “El Chapulin Colorado”, which Rudy earlier used to distract Victoria’s guards, plays.