The cartoon was made during World War II, and reflects the United States' attitude towards one of its main enemies at the time, the Empire of Japan. In the cartoon, Bugs Bunny lands on an island in the Pacific and is pitted against a group of highly racially-stereotyped Japanese soldiers. Bugs shows no mercy against the Japanese soldiers, greeting them with several racial slurs such as "monkey face" and "slant eyes", making short work of a large sumo wrestler, and bombing most of the Japanese army using various explosives, including grenades hidden in ice cream bars. The cartoon's title is a play on the verb "nip" as in "bite" and "Nips", a then-widely used slur for Japanese people, based on the fact that the Japanese word for "Japan" is "Nippon" (or "Nihon").
The Film Daily called the seven minute short "good fun", and gave the following synopsis: Bugs Bunny, castaway on a Pacific isle, thinks the setting is ideal until he finds his paradise infested with Japanese soldiers. How he single-handedly exterminates the enemy makes for a laugh-filled few minutes of typical Bugs antics, off-screen remarks and action in this Technicolor cartoon produced by Leon Schlesinger.
Somewhere in the Pacific, Bugs is floating in a box, singing to himself, when 'the island that inevitably turns up in this kind of picture' turns up. Bugs swims towards it, and admires the peace and quiet, when bombs start going off (The Storm from the William Tell Overture is also heard in the Background). Bugs ducks into a haystack, and soon comes face to face with a Japanese soldier; a short, bucked tooth, monkey-footed Japanese man who says his 'Ls' as 'Rs' and who might be rapidly stating the names of Japanese cities whenever he moves. The soldier chases Bugs to a rabbit hole, where the soldier dumps a bomb inside. However, Bugs manages to blow the soldier up with the bomb. When the soldier tries to pull Bugs out, Bugs appears as a Japanese general (presumably Hideki Tojo), but is soon recognized by his trademark carrot eating, prompting one soldier (who says he saw Bugs in the "Warner Bros. Leon Schlesinger Merrie Melodies cartoon pictures", referring to the fact that Bugs was originally exclusive to that series) to ask him "What's up, Honorable Doc?"
Bugs then jumps into a plane to get away from the soldier, who jumps into his own plane. However, Bugs ties the soldier's plane to a tree, causing the plane to be yanked out from under him. The soldier parachutes down, but is met by Bugs in mid-air, who hands "Moto" (cf. Mr. Moto) some 'scrap iron' (an anvil), causing the soldier to fall. Painting a Japanese flag on a tree to denote one soldier down, Bugs runs into a sumo wrestler, whom he confidently faces off against (cockily marking a second bigger flag on the tree). After getting temporarily beaten by the sumo wrestler (who wipes the second mark off the tree), Bugs dresses as a geisha girl and knocks the wrestler out, who repaints a second flag on the tree before passing out.
Seeing a bunch of Japanese landing craft making their way to the island (exclaiming "Japs! Hundred of 'em!"), Bugs thinks of a plan to get rid of all of them. He comes out in a 'Good Rumor' (a parody of Good Humor) truck, which plays Mozart ("Der Vogelfänger bin ich ja" from The Magic Flute). Bugs hands each of the Japanese an ice cream with a grenade inside it. All the Japanese are killed off from the explosions, save for one who was killed after redeeming a 'free' ice cream from Bugs. Having now painted dozens of Japanese flags on the trees denoting all the downed enemy, Bugs comments again about the 'peace and quiet - and if there's one thing I CAN'T stand, it's peace and quiet!'.
Bugs spots an American battleship in the distance and raises a white flag, yelling for them to come get him. However, they do not notice him and keep going. Bugs is insulted, "Do they think I want to spend the rest of my life on this island?" With this remark, a female rabbit (dressed in a more Hawaiian outfit) appears saying "It's a possibility!" Bugs then pulls down the distress flag, lets out a wolf cry, and goes running after her.
Since the 1960s, Bugs Bunny Nips the Nips has become very controversial, because of its portrayal of the Japanese and Bugs' attitude and casual violence toward them. Despite its dated anti-Japanese slant (in the wake of the Japanese attack on Pearl Harbor drawing the United States directly into World War II against the Axis powers), and because the cartoon was not one of The Censored Eleven, it was occasionally shown on television in syndicated packages with other pre-August 1948 Warner cartoons that were under the ownership of Associated Artists Productions. It debuted on home video in December 1991 on the first Golden Age of Looney Tunes laser disc collection. The niche market format did not cause a stir, but when the 5 disc set was later issued in the more accessible VHS format on 10 separate tapes, Japanese rights groups protested its distribution, and both releases were withdrawn. Reissues for both formats replaced the cartoon with Racketeer Rabbit. The VHS reissue combined volumes 4 and 7 of the 10 tape set.
This was one of the 12 Bugs Bunny cartoons that were pulled out of Cartoon Network's June Bugs 2001 marathon by order of AOL Time Warner due to stereotypes of Japanese people.
This cartoon was shown, albeit in clips, on a special episode of the Cartoon Network show ToonHeads about cartoons from the World War II era while a voiceover explained how Japanese stereotypes in World War II cartoons tended to be very cruel (as shown in Norm MacCabe's Tokio Jokio, this cartoon, and clips of World War II-era Popeye cartoons).