Stan Marsh, Kyle Broflovski, Kenny McCormick, and Eric Cartman go to a theatre to see Asses of Fire, which stars the boys' favorite Canadian comedy duo Terrance and Phillip. However, the boys are refused entry due to the film strictly being R-rated, so they pay a homeless man to accompany them.
Immediately after the movie, the boys begin swearing everywhere they go. The other children are impressed and all see the movie as well - except for Wendy Testaburger, the girl Stan likes, who spends her time with brilliant exchange student Gregory. The children swear profusely in school the next day, which infuriates their teacher Mr. Garrison and leads to their mothers finding out. The children are forbidden from seeing the movie again, but after attending a class with school counselor Mr. Mackey that "cures them", they sneak out and see it again anyway. Afterwards, Cartman bets Kenny $100 that he can't set his fart on fire like Terrance in the film - his attempt goes too far and he sets himself on fire and a dump truck pours salt all over him. Kenny is rushed to the hospital where Dr. Doctor and the doctors try their best to bring him back to life, but they accidentally replace his heart with a baked potato, which explodes, killing him. Upon learning that their sons saw the movie again, their mothers ground Kyle and Stan for two weeks, and Cartman three weeks, for seeing the movie again. Kenny is sent to Hell for various naughty deeds (skipping church, profanity, throwing rocks at a bird, staring at boobs all day, etc.). He is tormented by Satan and his new partner, the recently deceased Saddam Hussein. McCormick learns that Saddam and Satan are lovers that have a dysfunctional relationship, and Saddam dominates and demeans Satan.
Back on Earth, Kyle's mother, Sheila, leads the parents of South Park in a campaign against Terrance and Phillip, as well as the whole nation of Canada. Terrance and Phillip are then arrested on the Conan O'Brien Show as war criminals, prompting Conan O'Brien to commit suicide by jumping out a window. When the United States refuse to release the duo, Canada retaliates by bombing the residence of the Baldwin brothers. Sheila and President Bill Clinton announce that the United States will go to war with Canada and have Terrance and Phillip executed at a USO show. After she overhears Cartman degrading her in a song, Sheila has Dr. Vosknocker implant him with a V-Chip, a device that administers an electric shock every time he swears. In Hell, Kenny hears Satan declare that the war is a sign of the Apocalypse and that when the blood of two innocent Canadians touches American soil, he will invade Earth. Kenny attempts to persuade Satan to abandon Saddam, but to no avail. A ghostly Kenny visits Cartman to warn him. Unable to reason with their mothers, the three boys form La R�sistance, partly so that Stan can win over Wendy as well as free Terrence and Philip. Gregory takes charge of the group and develops a rescue plan. He tells Marsh to recruit a God-hating French-accented boy expert on covert operations named "The Mole."
