Ali G and his family have left Iran after the 2009 Iranian presidential election. When Ali and his wife, Seineh, take a bus trip to visit her parents, she suspects that he has joined the Taliban as a revenge for their previous imprisonment in Iran. She is wrong, but the government is wrong to be misled by what might be a terrorist prank (or fraud), since Ali has the government's best interests at heart.
Ali G, now in hiding at his family's temporary London flat, sees his brother Abdul on the television news. Abdul is involved in a murder case (and in Ali's absence, has been charged with a crime and released on bail) and is seeking his help. Ali, though proud of his brother, refuses the offer, seeing the case as one for the police, but later agrees to assist.
Ali and Seineh find that the family of the murdered boy, Ali's cousin, was a victim of extortion. Police finally catch Abdul, but Ali is saddened to discover that he was in the pay of a gambling gang (the unseen murderers are his brother's gang). Ali and Seineh try to expose the gang's illegal activities, but Abdul is forced to go to prison for murder (once he learns of the truth, Ali feels ashamed of his role in this and admits it to Seineh).
Ali, disguised as a woman, learns that his brother is locked up with a gang of West London drug-dealers. He decides to meet with the leader to get his brother out, but he is found out and beaten up by the gang.
Ali G, in a disguise, meets the leader in prison. He gives him $50,000 to bribe the prison authorities to get his brother out of jail. The man accepts and arranges for a message to be left for Ali, stating that Abdul will be released within 24 hours and demanding that Ali keep his mouth shut about the drug deal.
Ali is distraught at the news of his brother's arrest, but the arrival of his brother's gang and his friend, a London gangster, solves his problem. They cut off the nose of the gangleader's wife, whom they suspect of informing the police about their criminal activities.
Ali G then finds that the gang's leader is a Major-General in the army, and decides to blackmail him into helping to hide his brother's drug stash.
The Major-General tries to take the money from Ali, but he hides
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