Automotive racing is in recent college graduate Maggie Peyton's (LINDSAY LOHAN) blood. After all, her grandfather was a champion and her dad, Ray Peyton Sr. (MICHAEL KEATON), owns the racing team under which Maggie's brother, Ray Jr. (BRECKIN MEYER), competes in NASCAR events. Despite an earlier involvement in street racing, Maggie has accepted a job in New York as an associate producer at ESPN and doesn't see herself getting back into the sport, much to the relief of her dad.
As a graduation present, he takes her to the local junkyard where she can pick out any car, and for seventy-five bucks she ends up choosing an old, beat-up Volkswagen Bug. Unaware that the Beetle is a former racing champion from decades earlier with a personality of his own, Maggie takes "Herbie" out for a spin and quickly comes to learn just that.
After a pit stop at a local garage where they pick up Maggie's former high school friend Kevin (JUSTIN LONG), Herbie transports them to a local car show where racing champion Trip Murphy (MATT DILLON) and his entourage, including right-hand man Crash (JIMMI SIMPSON), have made a surprise visit. Herbie ends up getting Maggie into the old racing gear he's been carrying, and with Maggie now donning a helmet that conceals her identity, Herbie forces a street race against Trip and his souped-up car.
When Herbie and Maggie win, that causes the egotistical Trip to want a rematch. With his participation in a big NASCAR race coming up and Ray Sr.'s team losing sponsors and money, Maggie ends up going along for the ride as Herbie hopes to save the day by getting her back into the world of automotive racing.