Rick Peck (McConaughey), Speedman's agent, goes straight to Les Grossman's office with a copy of the contract to get Tugg his TiVO, where he answers the call to learn that Tugg is being held for ransom.
When the Flaming Dragons call back with an offer of $100million for his release, Les tells them that they may as well skin him alive, and argues that he never negotiates with terrorists. Rick learns the truth -- they'll claim back the money the studio has lost through the insurance. He is given an ultimatum, and an emotional dilemma - to betray his best friend and client, and take a pay-off, or do something about it. Rick opts for a G5 plane and a lot of cash.
Meanwhile Speedman is giving the performance of his life to the guerrila fighters in a live production of 'Simple Jack' the Movie. His crew watch for the right opportunity to spring him out. Jeff Portnoy (Black) begs Kevin Sandusky and the others to keep him away from the drugs by strapping him to a tree.
After his performance, Tugg is given a little stick Academy Award by a little kid in the village - 'Half Squat', and begins to go "native".
Next morning, Kirk Lazarus, dressed as a Chinese farmer, enters the camp with Portnoy as his prisoner. His diversion allows the others to get into the camp, where they free Cody and 4-leaf Tayback (the author of Tropic Thunder -- who is a fraud, doesn't have hooks for hands, and never went to 'Nam).
The kid, who is the captain of the fighters, sees through Lazarus's story and blows his cover. Lazarus takes out two rifles and starts firing. They pin down the enemy.
Lazarus gets to Speedman, but he likes the camp now and feels that he has found his calling with a captive audience enjoying his work every night. Meanwhile the guards turn on Alpa Chino and there's a huge firefight.
Cody rigs the bridge to blow. Meanwhile Speedman manages to get inside Lazarus's head who takes off his make-up, so it's up to Kevin to get them both into the game. They pile into a truck and bust out of camp, until the little kid captain takes out an RPG and destroys their escape vehicle.
Speedman gets into character and charges towards the enemy to allow the others a chance to get an injured Kevin to safety, just like in the Tropic Thunder movie.
Speedman goes back for his boy. The others get into the chopper.
Speedman suddenly races back towards them with Half Squat on his back, stabbing him with a knife. 4-Leaf blows the bridge, and Tugg just makes it across in time. Lazarus picks him up and they sort out their differences - and this time Tugg has a tear in his eye.
They all get back to the chopper - but the little kid takes out his RPG again. He shoots at the chopper. Just then Rick shows up in the middle of the jungle with the TiVo box - and hurls it up in the air, deflecting the rocket.
It cuts to the Academy Awards, where Tugg Speedman wins the award for Best Actor on the film "Tropic Blunder" - a documentary on the making of Tropic Thunder.
Les Grossman applauds from his office having grossed $400 million and won all the accolades. He tells his aide that "a nutless monkey could do his job", before he heads off to an after-show party. Les walks towards a dancefloor and busts some moves as the credits roll.