The film begins in ancient Egypt, with a girl named Ema 'Emmy' Hesire (Kim Cattrall) and her mother (Phyllis Newman). Emmy is against her arranged marriage, and prays to the gods to be united with her true love. Strangely enough, Emmy vanishes before her mother's eyes, and ends up travelling through history, meeting famous persons of different ages, including Christopher Columbus, on her search for true love.
In the present day in Philadelphia, Jonathan Switcher(Andrew McCarthy) is an artist working in a mannequin factory. Jonathan takes his time perfecting the mannequin he is currently working on, which irks his boss who claims he needs to be working more on quantity than quality. Jonathan protests, but is fired. Unknown to Jonathan, Emmy has come to possess the mannequin he has just created.
Jonathan attempts to find other jobs, but his artistic passion gets him fired from almost every single one. One evening after his motorcycle breaks down in the rain, Jonathan passes by some department store windows belonging to "Prince & Company," and is surprised to see his mannequin in the store window.
The next day, Jonathan returns to the store, and ends up saving the life of its owner, Claire Prince Timkin (Estelle Getty). In return for this, Claire offers to find Jonathan a position in the department store. Jonathan is soon paired up with the flamboyant Hollywood Montrose (Meshach Taylor), the store's chief window-dresser.
Eventually, Jonathan finds the mannequin he created, and is surprised when it comes to life when he is alone. Emmy then explains herself to Jonathan, who is unsure if he is dreaming or has gone insane. The next day, Jonathan wakes up in a newly-created window display advertising tennis equipment and sports wear, unsure if he dreamed it all or not.
The window display begins to attract attention, bringing shoppers back to Prince and Company. The landmark store has been losing shoppers to a newer and trendier department store named Illustra. Secretly, a Prince and Company employee named Richards(James Spader) is being paid to convince Claire to sell her store to Illustra. However, after the recent floor traffic seen due to Jonathan's window display, Claire feels that Jonathan could be the key to saving her store.
Over the next several weeks, Jonathan and Emmy continue their secret romance, and keep improving the creativity of the store's window displays. Soon, Jonathan receives a call from his former girlfriend, Roxie Shield (Carole Davis), who just happens to work for Illustra. Jonathan meets her for lunch, where Roxie says that Illustra wants him to be their chief window dresser. Jonathan explains to Roxie that he can't, considering that he likes working at Prince and Company, as well as working with a very beautiful woman there.
Jonathan's words infuriate Roxie, causing her and another co-worker to sneak into Prince and Company after hours to take pictures of Jonathan and his supposed girlfriend. However, they are shocked when they see what appears to be Jonathan getting intimate with a mannequin (Emmy only comes to life or can be seen as living when only Jonathan is around).
Jonathan's store windows continue to be the talk of the town, and business continues to come back to Prince and Company, leaving the head of Illustra seething. Claire has been very impressed with Jonathan's work, and soon after makes him a vice-president in the Department Store, after firing Mr Richards.
Jonathan chooses to celebrate that evening by taking Emmy out on his motorcycle. However, before he can leave, he's accosted by Roxie again, who claims he needs to seek help, going around with a mannequin on his motorcycle, and begs him again to come to work at Illustra. Jonathan denies again, claiming that he has people at Prince and Company who care about him, and "someone who makes him feel special." As he rides away, Roxie yells after him that he'll be sorry.
Later that evening, Jonathan and Emmy enjoy their time alone in the store, before Emmy leaves his side to take her place in a store window. However, the previously fired Mr Richards and a former store security guard named Felix (G.W. Bailey) have come to steal Emmy, only they are not sure which mannequin is her. In desperation, they steal all the female mannequins from the store.
Jonathan wakes up the next morning in the store and is informed of this by Hollywood. Jonathan immediately suspects Illustra is behind this, and drives over there with Hollywood. Obviously, taking Emmy was an attempt to blackmail Jonathan, but all he wants to know is where Emmy is. Roxie stalks off insisting he won't see her again, with Jonathan giving chase.
The chase takes Jonathan to a backroom where a giant shredder is incinerating several female mannequins, and Emmy is slowly moving along the conveyor belt to her doom. just as she is about to fall in, Jonathan grabs her, and through a miracle, Emmy comes to life, grabbing his arm, as he pulls her out. Emmy is now free of her 'curse.'
In the aftermath, Claire comes to Illustra, and explains that she has videotape of Illustra's employees scheming to take over the company, as well as footage of them sneaking into the store after hours.
The film then ends with Jonathan and Emmy being married in a store window at Prince and Company, with Claire and Hollywood in attendance, as well as numerous pedestrians outside the window watching them exchange vows.