Ruthless millionaire Sam Stone (Danny DeVito) tells his mistress, Carol (Anita Morris), whom he is having lunch with at a trendy Los Angeles restaurant, that he intends to murder his vulgar and brash wife, Barbara (Bette Midler). Sam is greedy and grasping. He reveals to Carol that 15 years earlier, he only married Barbara for her money but her father (who was also his boss) took a long time dying. Sam thus built up a small fortune of his own but Barbara is the heiress to a much larger one of over $15 million. Furthermore he hates her choice in clothes and "modern" furniture.
However, when Sam arrives home at his and Barbara's fancy house in Bel Air, he finds the house empty. In frustration he tosses away the bottle of chloroform he intended to use to put Barbara to sleep before killing her (important later). He then receives a phone call from an anonymous man announcing that Barbara has been kidnapped and that Sam must pay a large ransom of $500,000 or else she will be killed. She will also be killed if he informs the cops or the media. ("or else" is exactly what Sam has in mind). Before long, the house is swarming with police looking for clues to the kidnapping which is now headline news!!!
The kidnappers are revealed to be Ken (Judge Reinhold) and Sandy Kessler (Helen Slater), a married couple who live in a lower class area of the San Fernando Valley and whom are both desperately poor and eager for revenge against Sam. Apparently several years earlier, Sam "made his fortune" by stealing a fashion idea from Sandy, along with the Kesslers' life savings to market it. Barbara, Sam's overweight, loud-mouthed wife, gets locked in the Kessler's basement, where she proves a handful to the amateur kidnappers. She never stops yelling, cursing, or screaming at the Kesslers. Ken slapping Barbara in the face to subdue her only makes her more angry and aggressive like some wild caged animal that will not calm down. (At this point, it's no wonder why Sam wants Barbara dead.)
Things go astray, however, when it becomes obvious that Sam doesn't want his wife back, and is in fact doing everything possible to goad the kidnappers into killing her. Unfortunately for him, the Kesslers, while desperate, are not about to murder anyone.
The next day when Sam does not show up for the ransom drop, Ken phones him and offers to drop the ransom first from $500,000 to $50,000, then the following day to $10,000. Sam still refuses.
Sam is unaware that the Kesslers are behind his wife's abduction (Sam has apparently forgotten about the Kesslers... as well as all of the other people he's scammed and ripped off over the years). But Sam is also unaware about his mistress Carol's real intentions towards him. Carol is actually a gold-digging grifter (con artist) in which she and her handsome but extremely moronic boyfriend, Earl (Bill Pullman) are planning to steal all of Sam's wealth for themselves. Believing that Sam made up about his wife's kidnapping to the public, Carol belives that Sam plans to toss his wife's dead body from the Hollywood hills at night, Carol has Earl lie in wait with a video camera. What he actually ends up filming is a rendezvous in a car between a prostitute and her john, who asks her to "make a lot of sound." The dim-witted Earl, hearing the woman's screams, mistakenly thinks the murder is happening right in front of him.
Without watching the tape, Carol sends an anonymous copy to Sam, who sees the sex act captured and immediately hits on Carol as the one who sent it and announces that he is looking forward to repeating the scene with her. Terrified, she hides out with Earl at his trailer and sends another anonymous copy to police chief Henry Benton (William G. Schilling).... who happens to be the john in the video. When Carol calls him, Benton, thinking that he is being blackmailed, asks her what she wants and she says the answer should be obvious: arrest Sam Stone.
The next day, Benton orders the police to conduct a search of Sam's house, planning to plant evidence in it, but he is surprised when real evidence turns up which includes the bottle of chloroform and pictures of Sam with Carol. The kidnapping investigation, led by the stuffy detectives Bender and Walters, which has actually led to Ken himself by now, is immediately called off (just when they begin to close in on the Kesslers) and Sam is arrested. The chloroform was part of Sam's plan to kill Barbara himself but he never did and now faces the dilemma of having to get his wife back in order to prove his innocence.
A third complication arises when Barbara reluctantly decides to take up exercise to relieve her boredom in her cell. To her own astonishment, she loses twenty pounds in one week during her confinement. She and Sandy bond unexpectedly over this and Sandy shares several of her fashion designs with Barbara, who loves them and offers to take them worldwide. In their euphoria, Sandy decides to let Barbara go. Barbara leaves, but comes back as soon as she finds out from the newspaper about Sam's mistress which leads her to realize that he wanted her dead. Just as Barbara comes back, a serial killer, known as the Bedroom Killer (J.E. Freeman), who has been stalking the neighborhood enters the Kessler household and attacks Ken, but falls down the basement steps, breaking his neck and dying in the process.
Barbara, Ken, and Sandy now hatch a plan for revenge on Sam. Now desperate to prove his wife is alive, Sam offers to pay the ransom the moment Ken calls him again. But now, armed with Barbara's inside knowledge, they have increased the ransom to precisely equal Sam's own net worth: over $2 million. Sam is outraged, but has no choice. He withdraws the cash, but begs detectives Bender and Walters to watch the drop site. They refuse, still thinking he murdered Barbara.
Meanwhile, Carol, baffled as to why Sam hasn't been convicted already, goes to a video store and plays the tape in the display model. But the scene of the whore and the client is played on every TV in the shop and Chief Benton's wife, who happens to be there, recognizes her husband.
When Sam goes to the bank to obtain as much of the money as possible, Benton can be seen withdrawing his own cash and with a passport, presumably in order to flee abroad.
Carol realizes Earl's mistake, and that Barbara really was kidnapped. She calls Sam and learns the time and place of the ransom drop. She tells Earl to go to the place and steal the ransom money.
The next day at the ransom drop to be at a local plaza in downtown Los Angeles, Sam waits with the cash (which was all from his account.) Barbara calls Sam from an office across the street instructing him to wait while yelling curses and obsanities at him claiming that the kidnappers are making her do it. She also demands that Sam also deposit his expensive gold Rolex wristwatch and a gold ring to make sure that he does not have any assets left to live on. Sam is forced to comply and she tells him that someone will arrive to pick up the money. The minute after Barbara hangs up, Ken arrives in disguise, wearing a crude clown mask and driving the serial killer's car, to demand that Sam hand over the briefcase with the case. But just when Sam does, scores of hidden police, led by Bender and Walters, arrive. Ken prevents himself from being arrested by claiming to have Barbara killed by his accomplice over a CB radio. Against Sam's protest, the police decide to let Ken go and instead "follow him home". But just then, Earl arrives with a gun to steal the ransom money from Ken. In the ensuing confusion, Earl is captured by the police, and Ken drives away in the Bedroom Killer's car, while a whole group of police cars silently follow him.
Ken sees the police following him and drives his car off the end of the Santa Monica pier with the ransom cash inside. Money starts rising to the surface and people on the pier jump in to grab it. Sam yells at the police officer nearest him to stop them and pushes him in too. The police search the water and bring up the car, with the body of the serial killer inside... dressed in Ken's clothes.
Sam fakes grief, but is ecstatic inside, believing that Barbara will now definitely be killed and her money is his at last. Instead, Barbara appears, telling Bender and Walters that her kidnapper (the serial killer) was insane, believing himself to have accomplices, and so she was able to escape as soon as he left. Bender and Walters walk away in satisfaction and the case is closed with Sam cleared of all criminal charges. Sam meanwhile is taken aback by how beautiful Barbara has suddenly become. As they embrace (out of eyesight of the departing police) she gives him a sound thrashing for his affair and in addition for not even trying to pay the ransom to save her, tells him that she wants a divorce and pushes him off the pier and into the water. Sam presumably swims ashore and although free and clear, is now without his money... and without his mistress Carol (whom no doubt the arrested Earl will rat out to save himself from going to jail).
In the final scene, on a beach not far away, Ken emerges from the water in scuba gear, carrying the briefcase with the ransom cash. Apparently Ken hid the dead body of the serial killer in the car, and planned the switch to get away from the police. Sandy runs to meet him and embraces him lovingly and kisses him. Barbara appears, having disposed of her husband, and runs to meet Sandy and Ken and they all dance for joy on the beach with the briefcase containing the $2 million.