Like other droids in the CZ-series, CZ-3 was equipped with a built-in comlink, sophisticated scrambling and surveillance equipment, and encryption protocols.
After arriving on Tatooine in a crash, CZ-3 lost his "twin brother" CZ-1, and eventually ended up in the employ of Jabba Desilijic Tiure, a Hutt gangster. Jabba used the droid in a sting operation, exposing the dishonesty of one of his rivals, Opun Mcgrrrr. Using CZ-3 as bait, Jabba lured Opun into stealing the droid because he thought it contained sensitive information. CZ-3 recorded the entire operation with its surveillance equipment, transmitting it to Jabba and proving Opun's guilt.
Due to a malfunction, however, instead of returning to Jabba's Palace, CZ-3 wandered the streets of Mos Eisley. Jabba sent his bounty hunter Takeel after CZ-3, while Mcgrrrr sent his henchman Tols Vengra with a similar goal.
CZ-3 was found and/or bought by the Jawa traders, who discovered that it was being searched and sold it to Het Nkik's clan. CZ-3 managed to escape from the sandcrawler of that clan before it was attacked by Imperial sandtroopers.
CZ-3 was later found by the two thugs Takeel and Tols Vengra. While the two discussed the droid among themselves, Zutton, Takeel's brother, appeared and shot CZ-3, destroying the droid. The droid's parts were picked up by several local droid dealers, but in the end, it had provided Jabba with enough evidence to expose Mcgrrrr's plot.