In a back alley of Gotham, a tourist family is mugged, and the mother and son threatened. Shortly thereafter, the crooks who swiped the husband's wallet are accosted by a costumed vigilante, that resembles a giant bat. The vigilante tells one of the crooks to tell his friends about him. When the crook pleads to know 'what' this creature is, the costumed man replies, "I'm Batman."
When the two crooks are found by the Police, Lt. Eckhardt shows up at the scene, dismissing their description of a man dressed up like a bat. However, the crime scene is soon found by Alexander Knox, a reported for Gotham City's newspaper, who has been following the 'bat attacks.' Knox has so far counted 8 sightings in under a month, and asks Eckhardt if it's true that Police Commissioner Gordon has opened a file. Eckhardt just dismisses the 'oddball' reporter.
Meanwhile, the Mayor of Gotham City has held a press conference, introducing the city's new District Attorney, Harvey Dent. Harvey promises to clean up Gotham, and make it a place for respectable people once again. This press conference comes just weeks before the 250th Anniversary Gala celebrating the birth of Gotham City.
Back at the Gotham newspaper, Knox meets one of the paper's new photographers, Vicki Vale. Knox is mildly interested in her, but then grows even moreso when she tells of her interest in trying to find out who Batman is. Knowing that Commissioner Gordon has a file on this vigilante, Knox intends to get into a charity benefit at Millionaire Bruce Wayne's mansion, where Gordon will be attending. Vale also decides to accompany him.
Meanwhile, Crime Boss Carl Grissom is angered at the persistence of Harvey Dent, figuring that the new District Attorney could find out about their connection to the Axis Chemicals plant. One of Carl's men, Jack Napier, nonchalantly suggests they break in and steal the files that could incriminate them. Carl takes to this idea, and recommends that Jack is the man for the job. Jack is reluctant, but Carl insists, calling him his "number one guy."
Meanwhile, at the charity benefit, Knox attempts to get information from Gordon, but fails, with the Commissioner denying that there is a Batman on the streets. Vicki, meanwhile, meets up with Bruce Wayne, who seems a little shy. Bruce eventually excuses himself when his butler Alfred requests his presence. In a secret command center, Bruce reviews video footage of the party, and catches Gordon talking to an associate, who has received a tip that Jack Napier is going to Axis Chemicals to 'clean it out.' Lt Eckhardt is handling taking care of him, but Gordon goes there to take charge.
At Axis Chemicals, Napier's men find the plant's safe...only to find the documents they came for are gone. Suspecting a setup, Jack cautions his men to watch out. Shortly thereafter, they are ambushed by Eckhardt and his officers. Gordon shows up shortly after the gunfire, and demands that Jack Napier be taken alive. During the chase, Batman eventually corners Napier, and catches him just before he falls into a vat of chemicals. However, Batman lets go, and Jack falls in. Gordon sees Batman, and orders him to halt, but the Caped Crusader gets away. Gordon then instructs his men not to mention what they saw.
The next day, Napier's death is ruled as a suicide, but Knox suspects that Batman ended up taking care of Grissom's man. Knox asks Vicki to help him further investigate the case, but she blows him off, saying she has a date with Bruce Wayne.
Meanwhile, Jack Napier has managed to survive, and makes his way to a seedy doctor to have his face repaired. However, the chemicals he fell into have permanently bleached his skin white, and turned his hair green. As well, his face seems frozen in a permanent grin. Jack then returns to Grissom's penthouse, having concluded that he had Eckhardt tip off the Police, and that Carl set him up to die. Revealing his newly-changed face, Jack claims to now be The Joker, and kills Grissom.
Meanwhile, Vicki and Bruce share a rather quiet evening in Wayne Manor. While Vicki is rather intrigued by Bruce, she finds that the large Manor does not seem to reflect much on him. When she invites him to an outing, he declines, saying he has to leave town for certain reasons.
Back in the criminal underworld, the Joker claims that Grissom has gone away for awhile, and has left him in charge, Claiming to oversee all of Grissom's affairs, the other crime bosses are not convinced, and still fail to acknowledge this, even when the Joker electrocutes one of their own.
Meanwhile, Vicki grows curious about Bruce, and follows him as he leaves his mansion. Though he said he was leaving town, she finds him staying close to Gotham. Following from a distance, Vicki sees him walk into an alley, and lay two roses on the pavement. She soon after calls Knox, asking to find any information regarding the street location.
Eventually, one of the crime lords attempts to go public, holding a press conference saying that Grissom has left him and his associates (not including the Joker) control of Grissom's Empire. It is then that the Joker appears, and stabs the crime lord in the throat, before driving off.
During the press conference, the joker dispatched one of his men known as Bob, to snap pictures of people there. One of them is of Vicki Vale, whom the Joker soon grows infatuated with.
Also of interest to the Joker is the Axis Chemicals plant. Using an unknown(to the viewer) combination of chemicals, the Joker creates a chemical known as 'Smilex.' Combined with any normal household product, it causes a person to die of laughter, leaving a permanent grin on the victim's face. Because of this, the public stops using any form of beauty and hygiene products, as so far, noone knows what is causing this.
Shortly after this, Vicki Vale receives a request from Bruce Wayne to meet him at the Gotham Museum of Art. When she gets there, she finds a table reserved, and receives a gift box containing a gas mask. Within seconds, the museum begins filling with sleeping gas. Vicki puts on the mask, only to see the Joker (flesh-tone makeup covering his white complexion) enter, and vandalize the art pieces before sitting at her table. It soon becomes apparent that the invitation was sent by him, for a rather twisted romantic evening for two for them.
Suddenly, Batman swoops in through the skylight, and makes off with Vale. The Joker's goons give chase, following the Batmobile through Gotham. When traffic blocks their way, Batman and Vicki get out and run away on foot. Batman eventually distracts the goons, while Vicki finds a hiding place. During his confrontation, a couple bullets hit Batman's chest and he goes down.
As the goons examine the body, one begins to remove the Batman's mask. Vicki attempts to snap a picture of his identity, but her flash catches the goon's attention. This gives Batman time to take them out, before summoning the Batmobile, and both he and Vicki head to the Batcave.
Once there, Batman reveals that he has found the source of the 'smilex' drug, and gives Vicki the information to take to the press. However, before she can ask more questions, she blacks out, and finds herself in her apartment...minus the film in her camera from the previous night. Noting the time and the file that Batman gave her, Vicki calls Knox, and the 'smilex' information makes the front page, and puts Batman at the forefront of the people's minds, including the Joker.
Bruce soon after pays Vicki a visit, and she angrily reprimands him for lying to her about leaving town. Bruce tries to explain more about who he is, but their conversation is interrupted when the Joker appears. Bruce attempts to threaten the madman, to which the Joker asks him a question: "Ever dance with the devil in the pale moon light?" Bruce is offput by this, but has almost no time to react as the Joker shoots him. Vicki watches as he and his men leave, but when she returns to Bruce's body in the next room, she finds it gone, with a silver serving tray with a bullet in it (Bruce was wearing this under his shirt as protection when the Joker shot him).
After this ordeal, Vicki returns to the newspaper, where Knox reveals the information he found regarding the street where Bruce was. According to the newspaper, this was the area where Bruce's parents were gunned down by an unknown gunman. Vicki soon begins to realize a bit more about Bruce through this.
Meanwhile, the Mayor and his aides hold a press conference to cancel the 250th anniversary gala for Gotham. However, their broadcast is interrupted by the Joker, who declares that Carl Grissom is dead, and that he is in charge of the crime syndicate in the city. Much to the delight of the common people, the Joker announces that a party will be held that night, with $20million in cash given out to the crowd, and promising that Batman will also appear.
Bruce has been watching the entire event unfold, and thinks back to the words that the Joker had said. The night his parents were murdered, the man who gunned them down also used the 'dance with the devil' line, and Bruce is certain that the Joker killed his parents. It is then that Vicki appears in the Batcave, having been let in by Alfred. Bruce tries to admit his feelings for her, but knows that there's little time for words, given what the Joker is planning.
Batman first sends the Batmobile to Axis Chemicals, in hopes of blowing up all of the Joker's activities. While he destroys the facility, the Joker was not in the building at the time.
Shortly thereafter, several giant balloons and floats make their way down the streets of Gotham, with the Joker playing music and giving away free money. Batman appears soon after, flying his Batwing plane. When the Joker sees this, he and his men put on gas masks, and let loose smilex gas in canisters attached to the balloons.
Batman shortly thereafter swoops in, and flies off with the balloons, saving most of the citizens. Once he has let them go, he returns in an attempt to take out the Joker. The Joker has other plans, and takes out the Batwing with one shot of a comically long pistol. The Batwing crashes, and Vicki (who was nearby covering the parade for the newspaper), rushes to the cockpit, only to find noone there.
It is then that she is accosted by the Joker, and taken up to the top of a nearby cathedral. Batman follows shortly afterward, just as the Gotham Police arrive and lock down the building. However, they are unable to ascend the stairs when the Joker uses an acid flower to cause one of the cathedral's bells to drop down and destroy the wooden stairway.
At the top of the tower, Batman confronts the Joker, blaming him for the death of his parents. However, before Batman can properly take care of the Joker, the clown ends up two-timing both Batman and Vicki, and soon the two are dangling from the top of the cathedral.
Shortly thereafter, the Joker's helicopter appears, and the Joker attempts to get away. However, Batman uses a grappling hook that gets entangled on the Joker's leg, and on a stone gargoyle. The weight of the gargoyle ends up causing the Joker to fall to his death.
In the aftermath of the ordeal, The Joker's men are captured, and it appears that Gotham is now safe. Batman has also sent a signal to the Gotham Police, to use if they ever need to call on him.
Meanwhile, Knox is surprised that Vicki isn't covering the event, and that she seems to have given up on trying to find out more about the Batman. As she walks away, she is greeted by Alfred, who is there to escort her to Wayne Manor, with the caveat that Mr Wayne will be 'a little late.'