Dave is a deputy district attorney in Los Angeles County who is prosecuting social studies teacher and activist Justin Forrester for firebombing the pharmaceutical corporation Grant and Strictland. Forrester denies this, but claims that Grant and Strictland has been engaging in illegal animal experimentation. This distances him from his daughter, Carly, one of Forrester's students.
Meanwhile, the evil Dr. Kozak has stolen a bearded collie from Tibet believing using his DNA to create a potion for immortality. He escapes the lab and Carly and Josh decide to take him home, naming him "Shaggy". When Dave discovers him, he puts him out in the garage, then he runs to get the newspaper. He gives it to him, but as he reaches for it, the dog bites him on the hand. His saliva goes into Dave's blood and DNA, infecting him.
The next day, Dave receives all of dog like traits which cost In the ongoing trial, Forrester testifies seeing the animals behaving like dogs, which sparks his suspicions about Grant and Strictland. When his dog-like behavior annoys the judge, he is removed from the case at a visit to the pound the next day, he changes into a sheepdog identical to the one from the lab. Kozak's team finds the real dog and takes him back to the lab.
Hidden in the laboratory, Dave witnesses Kozak injecting company president Strictland with a drug that will paralyze him for several months, giving Kozak enough time to usurp control of the company. After viewing security cameras, Kozak and his minions realize that somehow Dave became an exact copy of Khyi Yang Po. Kozak orders his goons to go to Dave's house to "pay him a visit."
When Dave comes home, still in his canine form, he overhears a conversation between Carly and Josh that he and his wife, Rebecca, may be splitting up. Upon hearing this, he then knocks over a Scrabble game and uses the letters to reveal and clarify all the past events to them. But when he gets out of the house, he is captured by Kozak's goons.
Dave is taken to the lab to be euthanized, but Kozak has a court summons, and must deal with him later. Right before he leaves, Kozak mocks Dave in canine form who bites him. He then begins to exhibit the same issues Dave had at the beginning of his adventure; he had successfully transferred the gene sequence into Kozak.
Dave, with the help of the dog-mutated animals, manages to escape as a human and races to the courthouse in his car with the mutated animals. He calls his family, tells them to meet him at the courthouse with clothes and the dog. He gets caught in a traffic jam and changes into a dog to get to the courthouse in time, where his family is waiting for him.
In the courtroom, Dave calls Kozak back to the stand and tries to get him to admit what he has done, but Kozak manages to hide his secret. Thinking fast, Dave mocks Kozak by implying he was working under Strictland's shadow, and angers him. They begin growling at each another, and the judge, exasperated by Dave's canine behavior, orders the bailiff to remove him. But Dave thinking fast, throws Kozak a nightstick like a common stick, alerting his dog senses to get it, thus causing him to grow a tail. Kozak is immediately arrested soon after.
The pharmaceutical company is returned to Strictland, the mutant animals are protected, and Dave is able to spend more time with his family. The film ends with them vacationing in Hawaii, where Khyi Yang Po is seen surfing. Dave's canine habits slightly remain, as he catches a Frisbee with his teeth in the closing scene.