Set in circa 1910, the story opens with a montage of European Grand Prix races in which one particular car appears to win every race. In the final race, the car crashes and catches fire, ending its racing career. The car ends up in an old garage in rural England, where two children, Jeremy (Adrian Hall) and Jemima Potts (Heather Ripley), have grown fond of it. However, a man in the junkyard intends to buy the car from the garage owner, Mr. Coggins (Desmond Llewelyn), for scrap. The children, who live with their widowed father Caractacus Potts (Dick Van Dyke), an eccentric Inventor, and the family's equally peculiar grandfather, implore their father to buy the car, but Caractacus can't afford it. While playing truant from school, they meet Truly Scrumptious (Sally Ann Howes), a beautiful upper-class woman with her own motor car, who brings them home to report their truancy to their father. After she leaves, Caractacus promises the children that he will save the car, but is taken aback at the cost he has committed himself to. He looks for ways to raise money to avoid letting them down.

Film critic Roger Ebert reviewed the film (Chicago Sun Times, 24 December 1968). He wrote: "Chitty Chitty Bang Bang contains about the best two-hour children's movie you could hope for, with a marvelous magical auto and lots of adventure and a nutty old grandpa and a mean Baron and some funny dances and a couple of [scary] moments."

The film was the tenth most popular at the US box office in 1969.

The Caractacus Potts inventions in the film were created by Rowland Emett; by 1976, Time magazine, describing Emett's work, said no term other than "Fantasticator...could remotely convey the diverse genius of the perky, pink-cheeked Englishman whose pixilations, in cartoon, watercolor and clanking 3-D reality, range from the celebrated Far Tottering and Oyster Creek Railway to the demented thingamabobs that made the 1968 movie Chitty Chitty Bang Bang a minuscule classic."

The Soundtrack has been released on CD four times, the first two releases using the original LP masters rather than going back to the original music masters to compile a more complete Soundtrack album with underscoring and complete versions of songs. The 1997 Rykodisc release included several quick bits of dialogue from the film between some of the tracks and has gone out of circulation. On 24 February 2004, a few short months after MGM released the movie on a 2-Disc Special Edition DVD, Varèse Sarabande reissued a newly remastered Soundtrack album without the dialogue tracks, restoring it to its original 1968 LP format.

The film was nominated for the American Film Institute's 2006 AFI's Greatest Movie Musicals list.

Film critic and Historian Leonard Maltin considered the picture "one big Edsel, with totally forgettable score and some of the shoddiest special effects ever." In 2008, Entertainment Weekly called Helpmann's depiction of the Child Catcher one of the "50 Most Vile Movie Villains."

Chitty Chitty Bang Bang was released numerous times in the VHS format. In 1998 the film saw its first DVD release. The year 2003 brought a two-disc "Special Edition" release. On 2 November 2010, 20th Century Fox released a two-disc Blu-ray and DVD combination set featuring the extras from the 2003 release as well as new features. The 1993 LaserDisc release by MGM/UA Home Video was the first home video release with the proper 2.20:1 Super Panavision 70 aspect ratio.

In 2011, Kritzerland released the definitive Soundtrack album, a 2-CD set featuring the Original Soundtrack Album plus bonus tracks, music from the Song and Picture Book Album on disc 1, and the Richard Sherman Demos, as well as six Playback Tracks (including a long version of international covers of the theme song). Inexplicably, this release was limited to only 1,000 units.

In April 2013, Perseverance Records re-released the Kritzerland double CD set with expansive new liner notes by John Trujillo and a completely new designed booklet by Perseverance regular James Wingrove.

As of March 2014, the film has a 65% "Fresh" rating (17 of 26 reviews) on Rotten Tomatoes.