Chase McCain, a cop sent away from LEGO City two years prior to the events of the game, returns under pleading from Mayor Gleeson, as the city is in the grip of a crime wave, one she believes Rex Fury, who has escaped from Albatross Prison, to be behind. Mayor Gleeson entrusts Chase to find him and bring him to justice like he had done two years prior. He calls Natalia Kowalski, his former girlfriend, to make sure she is okay, but is bitterly met by her due to Chase having revealed her identity during Rex's trial, forcing her to go under witness protection.
Chase arrives at the police station and is given a happy welcome by dim-witted rookie Frank Honey, but a less nice one from the new Chief of Police Marion Dunby. Chase receives police equipment, such as a police communicator (similar to a Wii U GamePad) by Ellie Phillips (Frank's crush) and is informed about Rex's escape from prison, and is quickly dispatched to stop several criminals. After arresting bank robbing clowns and dealing with a road block, he sees Natalia driving quickly and proceeds to talk to her. Their conservation is not long and Natalia steals Chase's car to go say goodbye to her father and to permanently leave LEGO City.
After getting another car, Chase then arrests some robbers after he obtains a grapple gun from Sheriff Duke Huckleberry, Ellie's uncle. Chase visits Rex's prison and discovers an escape tool from Bluebell Mine. Chase encounters Rex at the mine who quickly defeats him. Chase wakes up to find that Natalia's father has gone missing. Chase is then required to train in Kung Fu with a man named Barry Smith and later goes to rescue Frank from a group of thugs and bring a police truck back to the police station.
Chase goes undercover in Chan Chuang's gang, where he becomes a limousine driver for millionaire Forrest Blackwell and was later sent to steal a car. Chase also encounters a stranger in Chan's limousine company, who is revealed to be Natalia, who was searching Chan's office because her father was last seen getting into a limo, and Chase promises to find her father, but Natalia rejects his offer. Chase learns that Chan is working for Vinnie Pappalardo, another crime boss. To get in with Vinnie, Chase must break out Vinnie's right-hand man/cousin Moe de Luca with the help of a prison transport truck and also steal a delivery truck. After being accepted into Vinnie's gang, he is ordered to perform a bank robbery for his "private buyer". Shortly after Chan calls Chase to steal a moon buggy from Apollo Island. After he gets the job done, he saves Forrest Blackwell from a gang of thugs and finds out that Chan is holding Natalia hostage at his scrapyard.
Chase manages to rescue Natalia with some help from two police officers, but inadvertently forces Chan into hiding. Angered, Marion Dunby drops Chase from the case temporarily and transfers him and Frank to Bluebell National Park with Sheriff Huckleberry and they are sent to Farmer Hayes's place to look for some missing pigs. Chase quickly gets back on the case after accepting another job from Vinnie: a robotic T-Rex from the LEGO City museum. After delivering the dinosaur to Vinnie, he accepts another job: stealing a boat from the fire department. Afterwards Chase is forced to rescue Natalia from mysterious men Rex apparently works for and takes her to Ellie's place. Chase then tracks Vinnie and his private buyer, who is in fact Rex, who refuses to pay Vinnie for the work he had done.
Angered, Vinnie calls Chase for a job behind Rex's back, to steal from Forrest Blackwell. Chase learns about how Blackwell was going to build an apartment complex with a shopping mall in Bluebell National Park, but a discovery of a rare squirrel had shut down the project, causing Blackwell to never build anything again. Chase goes inside Blackwell's mansion, although he is attacked by Blackwell's sentinel guards. Chase manages to evade the Sentinels and returns to Vinnie's and finds the ice cream parlor that he owns overrun by Rex's thugs and Vinnie locked in the freezer (since Vinnie had done something against Rex's orders). Chase manages to save Vinnie and stop the thugs. After interrogating the leader of the thugs named Jimmy, Chase takes his place on a job Rex sent his men to do: steal a crane from the construction yard which Chase then uses to steal a telescope from an observatory for the "old man".
After following Rex's men to their hideout, Chase listens through a vent and hears Natalia's father Henrik Kowalski who is being interrogated by Rex. Chase navigates through the base and discovers that Forrest Blackwell himself is behind the crime wave. Chase also discovers that Blackwell had kidnapped Natalia in order to threaten her father into co-operating. Chase then rescues him and they both escape on a UFO. Chase then calls Ellie and tells her about Blackwell's plan. Chase is informed by Ellie that Blackwell was on TV not long ago, and the he will be holding a press conference outside of Blackwell Tower later that afternoon with news that would "change LEGO City forever." Chase proceeds to Blackwell's mansion in hopes of finding evidence and Natalia. Chase doesn't find Natalia but he discovers a small model of a colony on the moon. Chase, realising Blackwell Tower itself is a rocket to the moon, and that its launch would destroy LEGO City, ventures there with the police department to protect the citizens and apprehend Blackwell. Although the citizens are safe, using force field devices Henrik created for Blackwell, the rocket launches with Natalia on board.
Chase catches a space shuttle to the moon, and encounters Rex Fury and Forrest Blackwell. Chase battles Rex who uses the T-Rex Chase stole, with Chase using a repair mech. Rex loses and Blackwell fires him before destroying the shuttle, but Chase and Rex survive the blast and engage in a final battle, with Chase winning at the end. Blackwell smashes them off the platform with an escape pod, sending them into a free fall towards before fleeing, swearing vengeance, until he gets hit by a cow and flies away. Chase then skydives towards the command module that Natalia is being held in and triggers the parachute release, saving the command module.
Back on earth, LEGO City celebrates Chase's victory, Natalia tightly embraces Chase and is congratulated by Mayor Gleeson, but Chase believes Rex got away. Marion Dunby then reveals to Chase that Rex is in police custody, having crash landed through someone's roof just minutes prior, and offers him the honour of his arrest, but Chase turns it down and lets Dunby have it, claiming Natalia is more important. The game ends as the characters laugh when Frank thinks Chase was talking about video games, while one of Blackwell's sentinels is still very slowly chasing after Chase on a bicycle before the screen cuts to black.
- Along with The LEGO Movie, Ninjago and Chima, these are the only franchises that were originally licensed by LEGO.
- LEGO City: Undercover and its own prequel, LEGO City Undercover: The Chase Begins, are exclusive to the Nintendo Wii U and Nintendo 3DS and were both published and funded by Nintendo. This makes LEGO Dimensions the first time that its content can be accessed on a non-Nintendo console until LEGO City: Undercover was announced for a PlayStation 4, Xbox One, Nintendo Switch, and PC release slated for Spring 2017.
- This franchise is actually part of LEGO's longest running theme, LEGO City, which was formerly called as LEGO Town.
- When the franchise's Adventure world portal is approched, the LEGO City logo appears, but the "Undercover" part of the title is not there. In every other instance, it is referred to as LEGO City: Undercover.
- LEGO City: Undercover is the only videogame franchise not to have a Level Pack.