Deloris (Whoopi Goldberg) is a lounge singer in Reno whose singing career isn't going too well. She witnesses a murder that her married lover commits, and runs away to the police for fear of her life. A detective decides to hide her as a nun in a convent (her name is now Sister Mary Clarence). In the meantime, her ex-boyfriend is searching for her, offering $100,000 (which increases to $250,000) for her body - dead or alive.
The church/convent (St. Catherine's), which is located in a run-down neigborhood in San Francisco, has a very small congregation and not-so-good choir (made up of a group of nuns). Sister Mary Clarence eventually uses her musical talent to teach the nuns how to sing in harmony, and they sound wonderful. The nuns also get involved in their community, thus gaining popularity. Masses are now completely full of young and old, and the pope even hears of the excellent choir and plans to visit the church.
Meanwhile, a bad co-worker of the detective finds out that Deloris is at this convent, and he reveals this information to the ex-boyfriend. His side-kicks kidnap her and take her to Reno. This is when the other nuns find out that she's really a lounge singer, but want to go after her to save her from being killed. The detective is also on his way to Reno to save her.
Finally, after the side-kicks are unable to kill her (because she's dressed like a nun and they don't want to kill a nun), the ex-boyfriend decides to take matters into his own hands. He's about to pull the trigger on her, when you see that he actually gets shot (by the detective).
The bad guys get sent to jail, and Deloris goes back to the convent to conduct the nuns in their big performance for the pope who comes to visit. She's wearing the black robes, without the headpiece like the rest of the nuns. The congregation and the pope enjoy this performance, and St. Catherine's is now a revived church in a revived neighborhood.