Dick Tracy is called to the scene of a burglary and jewelry heist where a taunting note is left addressed to him. A henchman named Spade left the note on the orders of his boss Flush (who asks to be called Royal). Back at the station, Chief Patton announces his retirement from the force and that Lizz Worthington will be taking over as chief of police. Now down a team member, Tracy’s squad is assigned a new officer, Lt. Teevo who is a communications specialist and will be relaying messages to Tracy.
Spade delivers two more taunting messages through jewelry stores and Tracy meets with Kimberly Myne, also known as the Queen of Diamonds who is out after ten years in jail. The Queen actually gathers more information from Tracy than she gives back. Royal sends a thug named One Eye Jack to throw a giant blue diamond through Tracy’s home window. The diamond was given to them by Mr. Facet of the Desert Diamond Casino who then reports it stolen. When the diamond is returned, Facet is grateful and offers free chips for all visitors, leaving the nearby Emerald Emperor Casino empty. Dick Tracy finds this whole situation strange, and follows a hunch to watch the Emperor, where Royal and his gang of criminals carry off a heist. Before they get out with the loot, the Queen of Diamonds jumps them and steals the loot, leaving the gang for the cops to arrest.
Dick Tracy is called by the CIA’s Agent O’Brien for assistance in Washington, ruining Tess’s plans for a California vacation. An aging Cold War era East German spy, Baron Von KluMeister and his granddaughter Gretchen have escaped Russian agents in Germany and arrive in D.C. but before the CIA can pick them up Gretchen is kidnapped by two foreign agents, Markov and Alexi. Markov, going by the name Red Aurora, arranges a swap Gretchen for Baron Von KluMeister. Agent O’Brien agrees to the swap, but Tracy disguises himself as the Baron and subdues both Russian agents during the trade.
Red Aurora tells the CIA they were trying to help America and the Baron, who has just slipped CIA custody back at headquarters, is still programmed with an old Soviet mission. The Baron travels to a farm and digs up a suspicious package and returns to the city, trying to visit the Pentagon first but is turned away. Tracy suggests they use the Russian tracking frequency no doubt implanted in Von KluMeister to help track him down but when it is activated, the tracker points to Gretchen in their follow vehicle. Gretchen, Dimitri and Markov take control of their vehicle and ram Dick Tracy’s car, and he and Agent O’Brien fly off the Jefferson bridge into a river where they swim to shore.
Gretchen and her team race to the Multi Mega Media building in the city and hijack a helicopter from the rooftop. Tracy and O’Brien meanwhile call for a copter of their own and intercept Gretchen in mid-air. Tracy detaches a seat from their helicopter and throws it into Gretchen’s rotors, forcing them to crash-land near the Rotunda. None of the enemy spies are hurt, and Gretchen spies her grandfather nearby and grabs his package, which is in fact a bomb. Little does she realize Von KluMeister has already set the timer and it explodes as she races towards the Rotunda, killing her. Markov and Dimitri are arrested and the aging Baron is deported back to Germany. A Cold War soviet spy chief named Coldspot is revealed to have been behind the plot.
Tess Tracy signs Dick up to spend the night in the old haunted Hennessy Mansion with Governor Smart and Mayor Headstrong for a charity event. The old mansion is rumored to be haunted by a father who hanged himself in desperation when he lost the house, but a bullet was also found in the body. Since it is a charity event, Tracy is unarmed. All goes well, with the three asleep in sleeping bags when Governor Smart wakes in the middle of the night having heard footsteps. Terrified, he goes to find a way out and when Tracy wakes up he sees a phantom woman who says “Justice must be done,” and then leads him to the Mayor who has been tied, gagged and stands with a noose around his neck in a doorway. The Mayor is ok, but he doesn’t know who took him and there is no sign of the Governor. When they propose leaving, a painting speaks to them saying no one may leave the house and it is time for its revenge on the Governor who we see is held with a gun to his head in secret room.Tracy and the man behind the painting talk for a while, with the man demanding Tracy invite Ms. Lease Leonard from Eagle Point Realty Inc over with legal papers, to try and prove the Governor stole the house from the man’s father, J. Tucker Hennessy. Tracy pipes the conversation back to Chief Lizz at the station, who sends swat to the house. The man claims the Governor forced his father to sign the house over at gunpoint and then shot him, after which he made it look like a suicide.
Ms. Lease tells Tracy the house was sold fair and square and that the signatures look authentic. Outside Captain Ripski of the swat team works to stop a fleet of bulldozers who have arrived to destroy the mansion. Tracy removes the painting to confront the son of Hennessy who holds the Governor in the secret room behind it. He then lures the son out on to the porch on the roof of the mansion, and on his command, bulldozers charge forward, collapsing the front portion of the house and the son is killed by the fall and crushed beneath a bulldozer.
After the death, Tracy looks into the Hennessy claims and Teevo tells him the bullet wound was attributed to the son, but also that a super highway is going through the mansion, making the Governor quite a bit of money. Found in the wreckage of the house is a jewelry box that belonged to Rachel Hennessy, a daughter who was killed in a car accident. In it is a note which suggests the Governor might have had her killed. This is enough evidence for Tracy to get the Governor brought up on charges with the State Ethics committee.