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The film opens in the final race of the 2006 Looney Cup stock car racing season and championship in the Acme Speedway of the South, where a skilled but arrogant rookie racer, Lola Bunny, has overtaken her opponents, past a huge wreck, and has built up a huge lead over the cup's defending (but soon retiring) seven-time champion, Porky Pig, and perennial runner-up Daffy Duck. However, because of her refusal to make regular pit stops and get new tires for her car, her rear worn tires burst into flames on the final lap, causing her to skid and ultimately crawl to the finish line, barely managing to tie Porky Pig and Daffy Duck in a photo finish. Race officials announce that because the three racers are also tied in overall season points they will compete in one final tiebreaker race to be held at the Los Angeles International Speedway in one week to determine the champion.

While traveling down Interstate 40 to California, Lola becomes separated from Foghorn Leghorn, her transporter, and while trying to catch up becomes lost on U.S. Route 66, catching the attention of the local Looney City sheriff, Yosemite Sam in the process. A chase ensues, during which Lola crashes and gets tangled in wires, damaging part of the city's main street in the process.

Lola is taken to traffic court, where the city's attorney, Tom Cat, pleads against Lola. She is sentenced to repave the road using The Mystery Machine, an old van. Only interested in leaving and extremely furious, she makes an escape attempt before being hooked up, only to figure out that her car's gas tank was siphoned. Lola rushes through her first day of paving and the new road is so bumpy, unusable, uneven, and poor that she is told she must scrape if off and start over again.

When Bugs Bunny offers Lola a deal -- beat Bugs in a race around Acme's Butte and she is free to go -- Lola eagerly accepts. She leaves Bugs in the dust at the starting line, but loses control on the loose dirt turn and crashes into a cactus patch. While the city's tow truck driver, Bernie the Swallow, hauls Lola out of the cactus patch in which she landed, Bugs effortlessly cruises to the finish line after informing Lola that she races like she fixes roads. Lola is compelled to scrape of the botched pavement and start over again.

As the ensuing days pass, Lola is disturbed by nightmares of Daffy Duck winning the Looney Cup and landing Dinoco. She starts to befriend the city's residents and learn more about the city in the process: how Looney City was once a thriving city until the completion of the nearby interstate bypassed the little city, depriving it of its business traffic and visitors (and ironically, depriving those passing visitors of the natural beauty found in the scenery along the old highway); how Tom left behind his rich but unhappy life as an urban lawyer; what insect tipping (a parody of cow tipping) is; and how Bugs Bunny was once a famous racer himself (the "Bunny Hornet") -- and 3-time Looney Cup champion -- until a horrible crash in 1954 ended his racing career. Bugs bitterly refuses to reveal much about his past (despite Lola witnessing him expertly drifting through the loose dirt of Acme's Butte where Lola crashed), labeling his old trophies as "a bunch of empty cups".

By the time Lola finishes repaving Looney City's main road, she has formed a bond with the city and its residents. Rather than immediately leaving for California (as she had been initially been eager to do), she spends the day touring the city's businesses, receiving a fresh coat of paint and new tires for her car in the process, and participates in a cruise party that night. But she is suddenly found, then whisked away with her transporter, Foghorn Leghorn, without even a chance to bid farewell to Looney City. The city's residents are sad to see her leave, and Tom is angry to learn that it was Bugs who ultimately informed the media of Lola's whereabouts.

The final race among Lola, Porky, and Daffy opens with what the race's commentators call the "biggest race in history." Lola is distracted by her memories of Looney City, losing time to Porky Pig and Daffy Duck, and begins to fear she will simply lose. To her surprise, Bugs Bunny has arrived at the race, with Bernie and a few others from Looney City who will serve as her pit crew; Bugs, once again wearing his original "Bunny Hornet" racing stripes, takes over as Lola's crew chief. With Bugs' coaching, a record-fast pit stop for new tires for her car, and a few tricks learned from the small city's inhabitants, Lola is not only able to overtake her opponents, but has built a considerable lead by the final race.

As Lola approaches the finish line, Daffy sideswipes Porky in a desperate attempt to avoid finishing behind him yet again, sending Porky into a terrible rollover crash. Lola, fearing that Porky's racing career will end in the same way as did the Bunny Hornet's, comes to a full stop right before the finish line. After Daffy gleefully crosses the finish line, Lola then backtracks to push the veteran racer across the finish line ahead of her, saying that "I think Porky Pig should finish his last race". Although Daffy Duck has officially won the Looney Cup, he begins to learn that it's a hollow victory as he is jeered and despised for taking out Porky, while Lola is cheered as a hero for her good sportsmanship. Sylvester from Dinoco, Porky's sponsor company, offers to support Lola as her new sponsor; but Lola, having now had a change of heart, respectfully declines, saying that her current sponsor Rust-eze gave her her "big break," and she wanted to continue with them.

Two days after the race, Lola returns to Looney City, announcing that she will establish her racing headquarters there. This helps to revitalize the city and draw back visitors and tourists, with the once-abandoned Route 66 being reclassified as "Historic Route 66."