Zohan Dvir (Adam Sandler) is a superhuman but kind Israeli counter-terrorist and the finest and most respected soldier in the Israel Defense Forces. However, Zohan has become both disgusted and disenchanted by the constant fighting, secretly dreaming of moving to the USA and becoming a hairdresser. This reaches a breaking point when a barbecue he hosts is interrupted by the IDF sending Zohan on a mission to stop a Palestinian terrorist group being led by his personal arch-enemy, Fatoush "the Phantom" Hakbarah (John Turturro).Despite being upset over his party ruined, Zohan sees it as his long awaited chance to desert the IDF and move to America. During the pursuit he fakes his own death and smuggles himself onto a flight to New York City, cutting his own hair and taking the alias "Scrappy Coco" (the names of two dogs he shared the flight with) while claiming that he is "Half Australian, Half Mount Everest." Meanwhile the Phantom becomes rich and famous for supposedly killing Zohan and starts his own fast food business, "Muchen Tuchen".Initially unsuccessful in getting hired at several salons, Zohan's military expertise earns him a new friend, Michael (Nick Swardson), who gives him a place to stay. However, Michael starts to freak out when he finds Zohan having sex with his mother, Gail (Lainie Kazan). Zohan encounters a fellow Israeli named Oori (Ido Mosseri) at a disco; he recognizes Zohan but agrees to keep his identity a secret. Oori takes him to a block in lower Manhattan filled with Middle Eastern Americans, who are split between a Palestinian side and an Israeli side of the street. Zohan attempts to land a job in a struggling salon of a Palestinian woman named Dalia (Emmanuelle Chriqui). After first only allowing Zohan to sweep floors for free, she eventually allows him to be a stylist after he pleases a senior lady with a satisfactory haircut and back room sexual service. Zohan's reputation spreads instantly among the elderly women of lower Manhattan. Dalia's business booms, upsetting Grant Walbridge (Michael Buffer), a corporate magnate who has been trying to force out all the local tenants on the block so that he can build a roller coaster mall.Zohan is identified by a Palestinian cab driver named Salim (Rob Schneider), who bears a grudge against Zohan for having taken his goat away. Salim convinces his friends to help him kill Zohan, but he is forced after a failed bomb attempt to contact Phantom. Salim attempts to blackmail Phantom, but he ends up getting the stiff end of the deal as he convinces Phantom to visit New York to find Zohan. Meanwhile, Zohan realizes that he has fallen in love with Dalia, and comes clean to Michael and his mother about his true identity, before meeting Dalia. Dalia rejects Zohan after he reveals he was formerly an Israeli counter-terrorist operative. Zohan decides to leave Dalia and confront Phantom in a championship Hacky Sack game sponsored by Walbridge. Zohan's fight is cut short with sudden news of the Middle Eastern block being attacked, and he quickly leaves.Zohan arrives and calms the Israelis and Palestinians, who each blame the other for the violence, while making peace with Salim. Phantom then appears and confronts Zohan, but Zohan refuses to fight. Dalia appears, revealing that she is Phantom's sister, and convinces her brother to cooperate with Zohan against the arsonists, revealed to be white racist rednecks hired by Walbridge to instigate an inter-ethnic riot so he can get his new mall in the aftermath. As Zohan and Phantom work to save the block, the latter admits that he always wanted to be a shoe salesman rather than a terrorist.Although the rednecks are defeated and Walbridge sent to jail, Phantom accidentally destroys all of the shops on the block. However, with the Israelis and the Palestinians united, the block is transformed into a collectively owned mall called the Peace and Brotherhood Fire Insurance Mall. Oori re-opens his "Going out of Business" electronics store, Phantom opens a shoe store in the mall called Fatoush's Kickin' Shoes, Salim gets back his goat, which he gives children rides on next to Trendy Toddler, and Zohan and Dalia open a joint beauty parlor called Dalohan, Zohan having married Dalia. Zohan's parents show up approving his new life before his father asks that he cut his hair, which he happily does.