Prologue: Greyhound bus headed for San Francisco. Seems to be the heyday of the Haight-Ashbury scene. We meet a limping, grizzled Birdlace (River Phoenix): he chain smokes, doesn't eat much as we hear the week's numbers from Vietnam on TV: 141 dead, 391 wounded, 47 missing. Back on the bus, as Birdlace daydreams through the window, a flashback begins. Most of this movie is presented in one long flashback.
Act I: November 1963; the Four B's (Birdlace, Burzin (Richard Panebianco), Benjamin (Mitchell Whitfield) and Bueller (Anthony Clark), a.k.a. Okie) are going on a last night of liberty before shipping out for Okinawa. Bonded by bullshit and macho posturing, they have an "elite" event planned - the eponymous 'Dogfight' - that everyone seems to want in on, even officers. Each goes "hunting" for a date to bring to this event; it is soon evident they are to bring the most unattractive girl they can find; the winner gets a jackpot.
After striking out with several prospects, Birdlace steps into Rose's Coffee Shop to get out of the rain. He is desperate, and for just a beat seems to consider the old lady seated near the door. Rose Sr. (Holly Near) is cold to him but he hears Rose Jr. (Lili Taylor) trying to learn the guitar chords for Malvina Reynolds' "What Have They Done to the Rain?" He strikes up a conversation full of nonsense, especially about the imaginary Jim Swain and his great influence on Bob Dylan as co-writer of most of Woody Guthrie's songs. Rose knows her stuff and isn't buying it, but is warm to Birdlace anyway. After hesitating, she agrees to go as his date to "a party."
Rose gets sick at the Dogfight, so Birdlace wins the consolation prize. As she is cleaning herself up in the rest room, she overhears an argument between Burzin and his date, Marcy (E.G. Daily). Marcy has "won" the dogfight for Burzin and is fighting with him over her share of the jackpot - it turns out she was hired, not found. Rose questions Marcy and learns the truth of this event; Rose then slaps and slugs an inebriated Birdlace as he sits on a bar stool and gives him a verbal lashing as well - even to the other Marines who seem overwhelmed by her ferocity. With tear-smeared makeup, Rose then takes refuge in her room - her folk music world - listening to Joan Baez sing "Silver Dagger."
Act II: Birdlace deals with his own dogfight - the large German shepherd in Rose's back yard - to put a note on her window - an apology and an invitation to dinner. She accepts but on her terms - if there's any more dogfight, she'll kill him. He declines what appears to be a Polish or Ukrainian restaurant saying "We can do better." They end up going into an elegant establishment with string quartet and tuxedoed wait staff, and are denied entry because Birdlace has no dinner jacket. Now on a mission that binds them, they roust an elderly clothing store couple out of bed to get Birdlace a jacket, which he wears proudly with price tag still hanging from the collar, to get a seat at the restaurant. After dinner, as they walk, he throws the just-purchased jacket from an overpass into traffic below.
Scenes jump from Birdlace and Rose to the other B's enjoying their liberty in a much different fashion - getting tattoos (bees, of course) and being serviced orally by an arcade hooker as they watch Russ Meyer's The Immoral Mr. Teas. At one point, in a Chinatown tattoo parlor, Burzin sees Birdlace walking with Rose but does not let on to the others - he senses there is something important going on there.
Rose and Birdlace argue about their differing approach to life - one a pacifist, the other a soldier who sees change resulting from shooting. Nonetheless there is a deepening bond between them.
Rose takes Birdlace to the Still Life Cafe, where she hopes to sing one day. When she writes to him, she wants him to know what she's talking about. While there, he asks her to sing the song she was singing earlier in the coffee shop, which she does, reluctantly. This simple, quiet version of the entire song ("What Have They Done to the Rain?) sums up all that is going on in the world at the time as well as with both of them personally.
Birdlace then takes Rose to an arcade - the complete opposite of The Still Life - where they play Whack-a Mole to Rose's delight. Knowing that music is important to her, he then takes her into a special room full of music machines. He drops coins into all of them which soon results in a cacophony - but a charming one, like a magic carnival. Finally there is only one large music box playing and they dance slowly, awkwardly kissing - perhaps the first kiss for both of them.
In spite of his macho banter, use of profanity and willingness to use a girl in a dogfight, Birdlace is actually very courteous and thoughtful. Arriving back at Rose's place, he does not push himself on her - but is glad when she asks him in. He asks if it's OK before he touches her or removes some of her clothing, and having recently viewed the films about STDs in boot camp, is sure to get out a condom (he hides it under her teddy bear as she puts on a robe in her closet). Rose has actually invited somebody into her world. As they begin to cuddle and embrace, one song ends and The Freewheelin' Bob Dylan drops onto the turntable; they begin sweet and tender foreplay as "Don't Think Twice, It's Alright" plays.
Act III: Birdlace and Rose are on the sidewalk in front of her building. She hands him a piece of paper with her address on it. She says he can write, but seems resigned to never hearing from him again. Birdlace runs, with backlighted bridge in background.
Birdlace finds the other three Bees in the bus station appearing haggard from their night of liberty, and the loud, brash military talk and swagger soon replaces all remnants of his quiet night with Rose. On the military bus to Treasure Island, after exaggerated bragging about spending the night with an officer's wife, Birdlace has a heart-to-heart talk with Burzin about how full of shit they all are. In a great speech that sums up the acceptance of bullshit as the basis of all that they do, Burzin points to the two Bee tattoos on his arm and says there's no bullshit in that. Amid continuing macho talk, Birdlace tears up the paper with Rose's address and throws it out the window - he's "all in" with his Marines and their mission.
DISSOLVE to Rose sitting on the floor in her room, holding her guitar, listening to Pete Seeger's record of We Shall Overcome. She is not at all sad or remorseful; in fact she appears hopeful.
DISSOLVE to an endless stream of soldiers carrying duffle bags on their shoulders embarking for overseas duty.
DISSOLVE to TV news report of Kennedy's assassination - not dwelt on long. FADE to black.
Open on an exterior shot of the Four Bees playing cards in a military camp in Chu Lai, South Vietnam, 1966. Okie tries to break the monotony by telling a joke. Shells land nearby; Benjamin is killed and Birdlace's leg is wounded. As Okie and Burzin drag Birdlace to safety another shell hits and kills them both. At the sound of another shell exploding, JUMP CUT to a startled Birdlace coming out of the flashback, on the bus going to San Francisco, 1967.
Birdlace walks the streets of Haight Ashbury to Van Morrison's "T.B. Sheets." As he passes Rose's Coffee Shop a hippie asks Birdlace how many babies did he kill. Birdlace goes into a seedy bar called The Circus - perhaps to remember and relive his first embrace with Rose in the carnival-like room of musical machines. Instead, this is a dive with cheap circus posters and clown paintings. It is also across the street from Rose's and Birdlace watches from the window for a while. The only other patrons are three much older men yet Birdlace seems to fit right in with them - his youth is gone. Tattoos are displayed; Birdlace now has four Bee tattoos in addition to the bluebird of happiness on his hand; the fat bartender has a "belly dancer" on his belly. These older guys are crude but they have respect for Birdlace's military service. They describe for Birdlace that Rose Jr is being groomed to take over Rose's Coffee Shop. Birdlace sees Rose come out of the coffee shop with some departing friends, then go back in.
He crosses the street to The Rascal's "Groovin."
The door is open and has a Peace Corps poster on it. He enters quietly and watches Rose in the same back corner where he first saw her. Now she is drying glasses. He calls her name and she walks to him; few words are spoken. She sees his scars and we see that she is much more mature now. They hold a long wordless embrace. It is clear they are deeply in love and there is hope that Birdlace can recover and put his life together.