- A down-on-his-luck inventor turns a broken-down Grand Prix car into a fancy vehicle for his children, and then they go off on a magical fantasy adventure to save their grandfather in a far-off land.
- Eccentric inventor Caractacus Potts, his two children, and his beautiful lady friend, Truly Scrumptious, go on a picnic at the beach where they are soon whisked into a magical world of pirates, castles, and a flying car called Chitty Chitty Bang Bang. In the adventure that ensues, they journey to Vulgaria and encounter the evil tyrant Baron Bomburst and his child-hating wife, who kidnap Potts' children and steal Chitty Chitty Bang Bang. With the assistance of the kindly village toymaker, Potts plans an elaborate scheme to rescue the kidnapped children and Chitty Chitty Bang Bang from the Baron's castle on his birthday.
- In the early 20th century England, eccentric Caractacus Potts works as an inventor, a job which barely supports himself, his equally eccentric father, and his two adolescent children, Jeremy and Jemima. But they're all happy. When the children beg their father to buy for them their favorite plaything - a broken down jalopy of a car sitting at a local junk yard - Caractacus does whatever he can to make some money to buy it. One scheme to raise money involves the unexpected assistance of a pretty and wealthy young woman they have just met named Truly Scrumptious, the daughter of a candy factory owner. But Caractacus eventually comes into another one time only windfall of money, enough to buy the car. Using his inventing skills, Caractacus transforms the piece of junk into a beautiful working machine, which they name Chitty Chitty Bang Bang because of the noise the engine makes. At a seaside picnic with his children and Truly, Caractacus spins a fanciful tale of an eccentric inventor, his pretty girlfriend (who is the daughter of a candy factory owner), his two children, and a magical car named Chitty all in the faraway land of Vulgaria. The ruthless Baron Bomburst, the ruler of Vulgaria, will do whatever he can to get his hands on the magical car. But because of Baroness Bomburst's disdain for them, what are outlawed in Vulgaria are children, including the unsuspecting children of a foreign inventor of a magical car.—Huggo
- A racing car, which is a composite of a 1914 Overland and a 1928 Ford Model A engine, had a successful career winning races across multiple years from 1907 onward in France, Germany and other nations. In the 1909, at the British Grand Prix, the said car swerves to avoid a dog and a little girl who was bending to pick it up, loses control, crashes, and catches fire, bringing its racing career to an end.
In 1910, the car ends up in an old garage owned by Mr Coggins (Desmond Llewelyn), where two children, Jeremy (Adrian Hala) and Jemima Potts, (Heather Ripley) have grown fond of it as they play in it. The kids are told by the Junkman (Victor Maddern) that he intends to buy the car, to crush it and melt it down to liquid ore. The Junkman offers 15 Shillings, but Coggins demands 30 Shillings to part with the car. The Junkman agrees and offers to pick the car up the following day. The kids beseech Coggins, who agrees to sell the car to their father, if he can match the offer of 30 Shillings.
While skipping school, the kids meet Truly Scrumptious (Sally Ann Howes), a beautiful upper-class woman with her own motorcar. The kids ran on the street, and Truly swerves the car to avoid hitting them and ends up in the nearby pond. Truly brings them home to report their truancy to their father. Truly shows interest in Caractacus' odd inventions, but he is affronted by her attempts to tell him that his children should be in school. Caractacus believes that his kids are smart and that skipping school once in a while allows the other kids in class to catch up with them.
The two children, who live with their widowed father Caractacus Potts (Dick Van Dyke), implore him to buy the car before the Junkman does, but he is unable to due to having no money. Caractacus is an eccentric and unsuccessful inventor, and lives with his equally peculiar father Grandpa 'Bungy' Potts (Lionel Jeffries). Bungy roams around in full military gear and served in the British army in India. Caractacus keeps tinkering with new idea such as rockets tied behind his back to send him flying through the air. He even has an elaborate machine that cooks him breakfast with toast, eggs and sausages. Caractacus does not want to disappoint his kids but has no idea how he can get 30 Shillings at such short notice.
That night, while going over his bizarre inventions, many of which seem to be similar in function and form to modern appliances, such as vacuum cleaners and televisions, Caractacus discovers that one of the sweets he has invented can be played like a flute, which makes it a musical hard candy whistle. The holes in the sweets were a mistake due to fixing the wrong boiling point for the candy.
He tries to sell the "toot sweet" to Lord Scrumptious (James Robertson Justice), a major confection manufacturer. Lord Scrumptious would not even meet Caractacus, but then Caractacus and the kids run into Truly, who turns out to be Lord Scrumptious' daughter. She agrees to get Caractacus to meet her father. Lord Scrumptious is very dismissive, but Truly asks Caractacus to persist and demonstrate the Toot Sweet to her father. When the factory is overrun by dogs responding to the whistle, he is thrown out.
Then he takes his automatic hair-cutting machine to a carnival to raise money, but it goes haywire. He "hides" from an angry customer named Cyril (Arthur Mullard) by joining a song-and-dance act, stealing the show and earning enough tips to pay for the car. Potts brings the car home and takes it in his garage to work on it for several weeks.
Potts rebuilds the car, which he nicknames Chitty Chitty Bang Bang for the noises its engine makes, and he and the children, accompanied by Truly, go for a picnic on the beach, where Truly becomes very fond of the Potts family and the other way around as well. Caractacus tells them a story about nasty Baron Bomburst (Gert Frobe), the tyrant ruler of fictional Vulgaria, who wants to steal Chitty Chitty Bang Bang and keep it all for himself:
In the story, the quartet and the car are stranded by high tide, but Chitty suddenly deploys huge flotation devices, and they escape inland. The Baron sends two comical spies ashore to capture the car for him, but they briefly capture Lord Scrumptious by accident, and then kidnap Grandpa Potts, mistaking him for the inventor of Chitty.
Caractacus, Truly, and the children see him being taken away by airship and give chase. When they accidentally drive off a cliff, Chitty sprouts wings and propellers and begins to fly. They follow the airship to Vulgaria, where the Baroness Bomburst (Anna Quayle) has ordered the imprisonment of all children, whom she abhors. Grandpa the "inventor" has been ordered by the baron to make another floating car and is bluffing to avoid being tortured. The Potts party is hidden by the local toy-maker (Benny Hill), who now works only for the baron.
The Toymaker harbors Caractacus' group in his shop, and they disguise themselves as jack-in-the-boxes to hide in plain sight from Bomburst's Child Catcher (Robert Helpmann). Chitty is discovered and taken to the castle, while Caractacus and the Toymaker search for Grandpa, and Truly searches for food, the Child Catcher returns and traps Jeremy and Jemima.
The toy-maker takes Truly and Caractacus to a grotto far beneath the castle where the townspeople have been hiding their children, and they concoct a scheme to free the children and the village from the baron. The toy-maker sneaks them into the castle disguised as life-size dolls, gifts for the baron's birthday. Caractacus snares the Baron and the town's children swarm the banquet hall. In the ensuing chaos, the baron, baroness, and Child Catcher are all captured. The family is freed and fly back with Truly to England.
As Caractacus' story concludes, the children ask if the story ends with him and Truly getting married. Caractacus does not answer; later, he tries to apologize for his children when he drops Truly off at her manor, saying that the difference in their social status would make a relationship between them ridiculous, offending Truly.
Returning glumly to his cottage, Caractacus is surprised to encounter Truly's father Lord Scrumptious, who is revealed to have been Grandpa Potts' former brigadier. Lord Scrumptious offers to buy Caractacus' failed candies and market them to the public as dog treats. Overjoyed that he has finally made a successful invention, Caractacus rushes off to tell Truly, but her house staff has already told her the news, and she meets him halfway. They confess their love for each other, and as they return home, Chitty flies up into the sky once again, this time without wings.
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