We present a multiwavelength study of the nucleus, environment, jets, and hotspots of the nearby FRII radio galaxy 3C 321, using new and archival data from MERLIN, the VLA, Spitzer, HST, and Chandra. An initially collimated radio jet extends northwest from the nucleus of its host galaxy and produces a compact knot of radio emission adjacent (in projection) to a companion galaxy, after which it dramatically flares and bends, extending out in a diffuse structure 35 kpc northwest of the nucleus. We argue that the simplest explanation for the unusual morphology of the jet is that it is undergoing an interaction with the companion galaxy. Given that the northwest hotspot that lies >250 kpc from the core shows X-ray emission, which likely indicates in situ high-energy particle acceleration, we argue that the jet-companion interaction is not a steady-state situation. Instead, we suggest that the jet has been disrupted on a timescale less than the light travel time to the end of the lobe, $sim 10^6$ years, and that the jet flow to this hotspot will only be disrupted for as long as the jet-companion interaction takes place. The host galaxy of 3C 321 and the companion galaxy are in the process of merging, and each hosts a luminous AGN. As this is an unusual situation, we investigate the hypothesis that the interacting jet has driven material on to the companion galaxy, triggering its AGN. Finally, we present detailed radio and X-ray observations of both hotspots, which show that there are multiple emission sites, with spatial offsets between the radio and X-ray emission.