The movie opens with the opening night (and closing night) of washed-up producer Max Bialistock's (Nathan Lane) latest musical endeavor, Funny Boy: A Musical Version of Hamlet. The crowd exits the theatre, exclaiming about how awful the show was ("Opening Night").
Later, Bialistock's new accountant, Leo Bloom (Matthew Broderick), comes to check his finances for Funny Boy. After looking at his books, Bloom gets an idea and muses that you can make more money with a flop than with a hit, even if its illegal. Bialistock tries to convince the insecure Bloom to collaborate with him to put on the biggest flop in history, then take the money and go to Rio de Janeiro. ("We Can Do It"), but Bloom refuses and goes back to his accounting firm.
Leo finds himself unhappy at his firm and fantasizes about being a Broadway producer ("I Wanna Be a Producer"). He has an epiphany and quits, returning to Bialistock and agreeing to help him with his flop. They form Bialistock & Bloom.
They search for the worst play ever written, and decide upon Springtime for Hitler, a "singing love-letter to Adolph Hitler," written by Neo-Nazi Franz Leibkind (Will Ferrell). They meet with Leibkind and ask for the rights to do it, but first they are coerced into singing and dancing "the Führer's favorite tune" and taking the sacred Ziegfried Oath ("Der Guten Tag Hop-Clop"). They swear, under penalty of death, to never never never dishonor the spirit and the memory of Adolph Elizabeth Hitler.
They then find the worst director in town, a flamboyant homosexual named Roger DeBris (Gary Beach). It takes some persuasion, but at the idea of a Tony Award, DeBris agrees to direct ("Keep it Gay").
They return to their office and find Swedish bombshell Ulla Inga Hansen-Bensen-Yanson-Tallen-Hallen-Svaden-Swanson (Uma Thurman) wanting an audition, despite the lack of auditions scheduled. Bialistock allows her to ("When You Got it, Flaunt it"), and they hire her as their secretary and cast her.
Next, they need to raise the money. Bialistock pimps himself out to every old lady he can get his hands on in exchange for the finances ("Along Came Bialy"). Max and Leo return later to find that Ulla has painted everything in the office white, from the walls to the telephone. Max leaves and Leo laments about the dangers of a relationship distracting him from his work, but he allows himself to kiss Ulla anyways ("That Face").
Auditions are run by DeBris and his assistant Carmen Ghia (Roger Bart), as well as Leibkind, Bialistock, and Bloom. During someone's singing audition for Hitler, Liebkind flips out at the performance and shows the auditioner how the song is supposed to be sung ("Haben Sie Gehört Das Deutsche Band?"). Max hires Leibkind as Hitler on the spot.
It's now opening night for their show ("Opening Night (Reprise)"). Leo wishes everyone good luck, and the others (minus Bialistock) chastise him for saying the ancient taboo while Bialistock does every bad luck thing he can manage, from breaking mirrors to throwing a black cat in front of people going in and out of backstage ("You Never Say Good Luck on Opening Night"). As he goes backstage, a major crash is heard, and Leibkind exclaims that hes broken his leg. Desperate, they recast Roger DeBris as Hitler and file into the to watch Springtime for Hitler.
As the show begins, the audience if horribly offended and begins to exit. Then Roger DeBris enters as Hitler. After seeing the flamboyant Hitler, the audience views the show from then on as a satire and love the show ("Springtime for Hitler").
Bialistock and Bloom return to the office, distraught at the success of their show. Bloom grabs the IRS books and attempts to leave, but is stopped by Bialistock. As they tussle, DeBris and Ghia enter to celebrate. To add to the mayhem, Leibkind, in a cast and a crutch, bursts in shooting a gun, claiming that Bialistock and Bloom broke the Ziegfried Oath, and therefore must die. There is commotion, DeBris and Ghia leave, and Leibkind runs out of bullets. The police enter shortly thereafter, arresting Leibkind. They then find the IRS books and arrest Bialistock for tax fraud, as Bloom is nowhere in sight. After they all leave, Ulla comes in and finds Bloom stuck behind the door. She convinces him to run away with her to Rio.
In jail, Bialistock gets a postcard from the newlywed Bloom about his time in Rio. Bialistock laments about his predicament ("Betrayed"). However, when in court, they come to his aid ("'Til Him"). Both Bialistock and Bloom are sentenced five years in Sing Sing penitentiary, but are pardoned after writing a musical in prison ("Prisoners of Love") and lifting the spirits of the other inmates.
They go on to become successful Broadway producers ("Leo and Max").
