<PAGE>
 
                                                                     EXHIBIT 3.1

                                   RESTATED
                           ARTICLES OF INCORPORATION
                                      OF
                                COST PLUS, INC.


          The undersigned, Ralph D. Dillon and Alan E. Zimtbaum, hereby certify
that:

          I.   They are the duly elected and acting President and Secretary,
respectively, of Cost Plus, Inc., a California corporation (the "Corporation").

          II.  The Articles of Incorporation of the Corporation are amended and
restated to read in full as follows:

          FIRST: The name of this Corporation is COST PLUS, INC.

          SECOND: The purpose of the Corporation is to engage in any lawful act
     or activity for which a corporation may be organized under the General
     Corporation Law of California other than the banking business, the trust
     company business or the practice of a profession permitted to be
     incorporated by the California Corporations Code.

          THIRD:  The Corporation is authorized to issue two classes of stock
     designated "Common Stock" and "Preferred Stock."  The number of shares of
     Common Stock which the Corporation is authorized to issue is 30,000,000,
     par value $0.01 per share.  The number of shares of Preferred Stock which
     the Corporation is authorized to issue is 5,000,000, par value $0.01 per
     share.

          The Preferred Stock may be issued from time to time in one or more
     series pursuant to a resolution or resolutions providing for such issue
     duly adopted by the Board of Directors (authority to do so being hereby
     expressly vested in the Board).  The Board of Directors is authorized to
     determine or alter the rights, preferences, privileges and restrictions
     granted to or imposed upon any wholly unissued series of Preferred Stock
     and to fix the number of shares of any series of Preferred Stock and the
     designation of any such series of Preferred Stock.  The Board of Directors,
     within the limits and restrictions stated in any resolution or resolutions
     of the Board of Directors originally fixing the number of shares
     constituting any series, may increase or decrease (but not below the number
     of shares in any such series then outstanding) the number of shares of any
     series subsequent to the issue of shares of that series.

          FOURTH:  Effective immediately following such time as the Corporation
     becomes a Listed Corporation (as defined in and within the meaning of
     Section 301.5 of the California General Corporation Law), there shall be no
     right with respect to shares of stock of the Corporation to cumulate votes
     in the election of directors.
<PAGE>
 
          FIFTH:  (a)  Limitation of Directors' Liability.  The  liability  of
                       ----------------------------------                      
     the  directors of the Corporation for monetary damages shall be eliminated
     to the fullest extent permissible under California law.

          (b) Indemnification of Corporate Agents.  The Corporation is
              -----------------------------------                     
     authorized to provide indemnification of agents (as defined in Section 317
     of the California General Corporation Law) to the fullest extent
     permissible under California law.

          (c) Repeal or Modification.  Any repeal or modification of the
              ----------------------                                    
     foregoing provisions of this Article FIFTH shall not adversely affect any
     right of indemnification or limitation of liability of an agent of the
     Corporation relating to acts or omissions occurring prior to such repeal or
     modification.

     III. The foregoing Amended and Restated Articles of Incorporation has been
duly approved by the Board of Directors and by the required vote of shareholders
in accordance with Sections 902 and 903 of the California General Corporation
Law.  The Corporation has 5,909,723 shares of Common Stock outstanding.  The
number of votes in favor of the foregoing amendment and restatement equaled or
exceeded the vote required.  The percentage vote required for the approval of
the amendment was not less than 66  % of the outstanding shares of Common Stock.
                                  --
<PAGE>
 
          The undersigned declare under penalty of perjury under the laws of the
State of California that they have read the foregoing certificate and know the
contents to be true of their own knowledge.

Executed at Oakland, California.

Dated: March ___, 1996

 
                                    Ralph D. Dillon
                                       President



 
                                    Alan E. Zimtbaum
                                       Secretary


                                      -3-