Loosely picking up where Herbie Goes to Monte Carlo left off, Pete Stancheck has inherited the one-of-a-kind auto mobile from his uncle, Jim Douglas. He travels to Mexico with his friend, Davy "D.J." Johns, to retrieve the car. There, they meet little Paco, a comically mischievous, orphaned pickpocket.
Pete and D.J. board a cruise ship to Panama to enter Herbie in the Brazil Grand Primeo. Unknown to them, Paco has hitched a ride under Herbie's hood to avoid three irate victims of his thievery. On the trip, they meet an anthropology student named Melissa and her extravagant, eccentric aunt Louise, who is trying to find a husband for her niece. When Herbie wreaks havoc on board, Pete pretends to court Melissa, with the intended result that her Aunt Louise will sponsor the men for their race.
Meanwhile, Herbie helps Paco escape captivity. Paco dubs the car "Ocho" and causes mischief with the ship's crew, such as taking a sailor's dinner which makes it look like Herbie ate it and spat out the chicken bones. When the overenthusiastic ship's captain, Blythe, has his costume party wrecked by the mischievous boy and car, he puts Herbie on trial and sentences him to be dropped into the sea. After landing, Paco is saddened until he sees Herbie emerge from the water, albeit rusted over. Paco then goes to work as a taxi driver, giving people rides in Herbie in order to make money.
Due to an error, Captain Blythe is separated from his ship, the Sun Princess, and tries to locate her while Louise is trying to work up a relationship with him. They unknowingly become two customers in Paco's taxi after he is pursued by the crooks, causing a car chase with Herbie.
Thence follows an Inca gold-stealing plot, Herbie's matador part in a bullfight, a romance between Aunt Louise and Captain Blythe, and some bananas which are initially used to camouflage Herbie in a convoy of farm vehicles travelling to market and later used to comic effect by Herbie and Paco in an attempt to stop the villains escaping in their plane. The bad guys are in pursuit of Paco, who misplaced some important film when he stole their wallets.
In the end the three crooks are arrested and everyone is reunited on the Sun Princess. Pete starts a serious relationship with Melissa, and he and Davy prepare Herbie for an upcoming race, with Paco as the driver. When Paco remarks "Ocho", Davy says that is Spanish for eight. Paco replies of course, as that is Herbie's number, 53. 5 + 3 = 8!
- Stephen W. Burns as Pete Stancheck
- Charles Martin Smith as Davy "D.J." Johns
- Joaquin Garay, III as Paco
- John Vernon as Prindle
- Alex Rocco as Quinn
- Richard Jaeckel as Shepard
- Harvey Korman as Captain Blythe
- Cloris Leachman as Louise Trends
- Elyssa Davalos as Melissa
The film was the most poorly received film in the Herbie franchise since its inception in 1969 with The Love Bug. Most film critics remarked that the series had run its course, with Leonard Maltin commenting that there was "one amusing scene where the VW turns matador; otherwise, strictly scrap metal." Maltin (who rated the film *½ out of ****) added that the plot dealt with its cast "encountering all sorts of 'hilarious' obstacles along the way." Phil Patton, author of the book Bug: The Strange Mutations of the World's Most Famous Automobile, observed that the Herbie franchise was "a game of diminishing returns: Herbie Goes Bananas...is filled with "south of the border" clichés and stereotypes."
- Only a few of the rusted Herbies that were used as props are left. The prop Herbie thrown into the sea was never retrieved. A total of 26 VW Beetles were used due to the enormous amount of stunts and tricks.
- This was the third sequel in The Love Bug series, and the last theatrical Herbie film for 25 years until the release of Herbie: Fully Loaded in 2005.
- It was the first Disney film to use some Hanna-Barbera sound effects for cheesy moments.