Lloyd Christmas is a simple-minded limousine driver in Providence, Rhode Island, who becomes infatuated with his passenger, Mary Swanson, as he drives her to the airport. Mary is heading home to her family in Aspen, Colorado, but leaves a briefcase at the airport. Lloyd notices, and retrieves the briefcase before a pair of thugs arrive to pick it up, dashing ahead of them to snag the briefcase. Lloyd is unable to catch Mary in time, and is left on the ramp of the airport with briefcase in hand (after having run off the end of a jetway).
Harry Dunne, Lloyd's roommate, is in the pet grooming business, and has recently spent his life savings converting his van (a 1984 Ford Econoline) into a "sheepdog". Both Lloyd and Harry quickly lose their jobs due to preventable accidents, and the two are distraught over their situation. Thinking Lloyd is a "professional" hired by the Swansons, or perhaps an FBI agent, the thugs exact revenge on Harry and Lloyd. Shortly after returning home, Lloyd and Harry are alarmed by the thugs at their door, one of them being armed. Believing them to be debt collectors, the two escape through their back window with the briefcase. While the pair are out looking for new jobs, the thugs behead Harry's pet parakeet. After they return home, Lloyd goes out to purchase some beer and other goods, but ends up getting robbed by "a sweet old lady on a motorized cart". Unhappy with life in Providence, Lloyd insists to Harry that they should leave their messed-up lives in Providence behind and head for Aspen to return the briefcase to Mary. Harry is at first skeptical of the idea, but agrees to do so after being persuaded by Lloyd. They leave the next day, and the thugs learn of their intentions and pursue the two Aspen-bound men.
On their way to Aspen, Harry and Lloyd have several misadventures. They stop at a diner for food, and Harry gets his burger spat on by Sea Bass (Cam Neely) after Harry unintentionally threw a salt shaker at him. Harry and Lloyd try to reconcile with Sea Bass and his friends by offering to buy them all beers, but Lloyd decides to put the beers (as well as some other items) on Sea Bass' account and they manage to escape, only to be briefly pulled over by a police officer (Harland Williams) in Pennsylvania. Days later, Harry and Lloyd pick up one of the thugs, Joe 'Mental' Mentalino (Mike Starr), who says that his car broke down, and the other thug (Karen Duffy) follows them. When the trio stop at a restaurant for lunch, Lloyd and Harry inadvertently kill 'Mental' by accidentally feeding him rat poison. Later, the two wind up separating when Lloyd accidentally takes a wrong turn and drives them to Nebraska instead of Colorado. With the two virtually out of gas and Harry being infuriated by Lloyd's mistake, he begins walking home, but Lloyd is able to trade the van for a small scooter, he catches up with Harry and the two proceed to Aspen.
Unable to remember Mary's last name, or locate her in the phone directory, the two spend a cold night in a park. They end up in a scuffle, and in the process discover that the briefcase is filled with a large sum of cash, as ransom money she had left at the airport terminal in exchange for her kidnapped husband, unbeknownst to Lloyd. The two decide to spend it 'responsibly' and keep track of all expenditures with "I.O.U.'s", but they end up living extravagantly: they check-in at a luxury hotel, buy a Lamborghini Diablo, have full body make-overs, and get expensive, gaudy candy-colored tuxedoes (sky-blue for Harry, tangerine for Lloyd) complete with matching top hats and canes. Lloyd tries to use the money to woo Mary before revealing he has the briefcase, but Mary ends up befriending Harry, whose stupidity she mistakes for intentional humor. Harry and Lloyd both mistake Mary's friendship with Harry as a romantic interest. This belief leads to friction between the two friends.
One night, Lloyd heads to Mary's house to reintroduce himself. He also asks her to come with him to his hotel to return the briefcase. Shortly after the two are found by the man behind the kidnapping plot, Nicholas Andre, a long time confidant of the Swanson family, who holds the two in the hotel room at gunpoint. When Lloyd reveals all the money is gone, replaced with I.O.U.'s, the kidnapper freaks and handcuffs Mary and Lloyd on the bed. Harry comes in the hotel room and is also put on the bed. Harry demands to Andre that he shoot him. Andre does, and as Lloyd is about to be killed, Harry emerges again and shoots a gun at Andre, but misses all the shots. The FBI intercede, and it is revealed that the FBI was aware of Andre's presence and the kidnapping scheme, and equipped Harry with a gun and a bulletproof vest as he entered the hotel. Mary is reunited with her husband, much to Lloyd's dismay, who did not even realize Mary was married. Lloyd has a vision of himself murdering her husband, but it is interrupted when Mary introduces her husband to him.
With no money, the two begin to walk home. Along the way, they inadvertently turn down a chance to be oil boys for Hawaiian Tropic bikini models directing them instead to a nearby town. They then walk off together, saying to each other how two lucky guys will get to tour all over the country rubbing down the girls before shows. Harry reassures Lloyd that "someday we'll get our break too, we've just got to keep our eyes open".