The film opens during the childhood of the orphaned protagonists, Stephen (Mark Ruffalo) and Bloom (Adrien Brody). Stephen, the older of the two by 3 years, instigates various acts of dishonesty and mayhem, while younger brother Bloom is content to play along with the shenanigans. The brothers' unrepentant mischief making causes their constant eviction from one foster home to the next. This prologue is narrated by magician Ricky Jay, foreshadowing the film's later focus on card tricks and sleight of hand.
After 38 different foster families, the brothers are transferred to a close-knit small town filled with friendly children their age. Bloom begins to long for the comfort of a normal and honest social life, and develops a crush on one of the girls there, although he is too shy to approach anyone, and therefore keeps his feelings inside. Stephen notices this however, and realizes he can use his brother's interest in the children to create a role for his brother to play so he may befriend the children, and help them execute their first con.
Stephen has Bloom convince his new friends that a mysterious old hermit told him of a cave that contains a magical whippoorwill. The hermit, Bloom claims, will reveal the location of the cave for $30. The children believe the story, he collects $30 among the group members, and they venture out to the cave. Stephen hides inside the cave just out of their sight, waving a lantern to hint at the magic whippoorwill just out of sight. The excited children run toward the light. Bloom, caught up in the moment runs too, but catching sight of his brother, remembers the con and becomes disheartened. The other children however are gleeful as they run through the muddy cave. Later, however the fuming parents of the hoodwinked children confront the brothers' foster parents. The boys return the $30, and are returned to the orphanage for larceny. However they end up profiting through the con's true target: they take a cut of the profits made by the town's lone dry cleaner who benefited by cleaning the muddy clothes of the bamboozled children.
The film picks up 25 years later with the brother's latest con. At a party celebrating the successful end of it, Stephen celebrates as Bloom wanders into a quiet room contemplating his dishonest life, one that seems to lack substance. He is playing solitaire when a young woman named Ruth arrives and begins flirting with him. Bloom explains that the reason he and Stephen's cons work so well is because they include symbolic themes and hidden associations, which trick the mind into recalling old memories, which the brothers use to their advantage. She tries to kiss him but Bloom gets up and walks away. He tells her that Stephen arranges everything perfectly, even that Ruth had been set up to want to kiss him. Bloom goes outside to get some air. Stephen comes out of the bar and the two walk through a Berlin Zoo. Outside of the camel cage, Stephen discusses the fake blood on Blooms suit (commenting on the one flaw: that fake blood doesnt turn brown after thirty minutes like real blood) but Bloom doesnt want to hear it. Bloom tells Stephen that he's tired of conning people and not living the way he wants to. He wants an unwritten life which he can't have if Stephen keeps coming up with the scripts to the cons. He tells Stephen he loves him and leaves Stephen in the zoo. He makes good on his recurring threat to leave the con business, and he moves to Montenegro.
Three months later Stephen finds him and asks Bloom to help execute one final con. The two will masquerade as two antique dealers and, along with their associate Bang Bang (Rinko Kikuchi), a Japanese explosives expert, will con a rich, socially-isolated New Jersey heiress named Penelope Stamp (Rachel Weisz). Bloom reluctantly agrees to the scheme, and the three travel to New Jersey to meet Penelope. The Brothers rent a Cadillac and go to the house and spy on it through binoculars and a telescope. Just then a canary yellow Lamborghini roars up the winding driveway and crashes into a statue. Out steps Penelope. Bloom changes his mind and doesnt want to con her because she is a woman, and Stephen had long ago promised that they would never con a woman. Stephen tells Bloom the con is designed to give Bloom what Bloom really wants, and tells him how its going to play out while Bloom watches Penelope play a song by The Clash on a harp. The plan is for Bloom to meet Penelope through a staged car accident, where she will hit him while he rides a bike. A few days later, Penelope is driving her Lamborghini down the street when Stephen and Bang Bang send Bloom down a hill on a bike right into the car. The plan fails however, when Penelope accidentally suffers a seizure after hitting the bike, injuring herself instead of Bloom.
After Penelope is discharged from the hospital Bloom drives her home and the two talk over tea. Bloom initiates the conversation by describing how his brother and he grew up to be antique dealers. Penelope keeps losing focus and snoring with her eyes open, which prompts Bloom to change the subject and ask about Penelope's past. Penelope explains that she was a shut in for most of her life because doctors thought she was allergic to everything. She later found out she was only allergic to the needles used for the test, but before she could leave her house and enjoy the world, her mother became ill. She tells Bloom how she "collects" hobbies; hearing about them, then studying them until she has mastered them. She has developed many unusual talents ranging from juggling chainsaws, making pinhole cameras, playing the harp, guitar, and banjo, deejaying, riding a unicycle, and making origami. Penelope asks if she will see him again and Bloom tells her that he and his brother are leaving the country by ship the next day, and will be gone for at least 3 months.
The next day, Bloom, Steven and Bang Bang are at the docks preparing to board a steamer bound for Greece. Bloom expresses doubts as to whether he hooked Penelope, but a few seconds later she crashes her car near the port. Unharmed, Penelope says hello and tells Bloom that she wanted to repay him and seeing the ship decides she will be joining them on their trip. She reasons that it looks fun and that she wants to see the world. Bloom introduces Penelope to Bang Bang and Stephen. The group enjoys themselves on the cruise and they play various games. Aboard the ship that night a Belgian man, Maximilian "The Curator" Melville (Robbie Coltrane), hired by Stephen, sneaks up on Penelope and tells her that the Brothers Bloom are not antique dealers, but are in fact antique smugglers. The four arrive in Greece, where Melville, as instructed by Stephen, offers Penelope a fake smuggling job of retrieving an ancient book from a hidden chamber in a museum in Prague, for an Argentine collector. Penelope convinces the Brothers to travel to Prague with her, unaware that this is all planned and staged. Bloom is upset that the smuggling business has gone straight to Penelopes head. She even goes so far as to make a smugglers flag. Stephen tells Bloom to let her have her fun. On the train, Bloom sees Penelope and Bang Bang stealing snacks from the porter. Upset that Bang Bang is encouraging Penelope, he separates the two. Bloom and Penelope sit in a cabin as Penelope drinks the gin that she stole. A lightening storm begins and Penelope explains that she loves thunderstorms! She begins to moan and roll around on her bed, then blurts out that she is horny. Bloom instantly leaves, quickly wishing her a good night.
In the bar car, Stephen receives a telegram from their old mentor, Diamond Dog. Apparently, Diamond Dog and the Brothers Bloom had a falling out which resulted in Stephen cutting out one of Diamond Dogs eyes. He tells Bang Bang to send a message back: If you feel the need to lose the other eye, you're welcome to. Stop. Love The Brothers Bloom. He then burns the telegram he just read.
They arrive in Prague the next day, and meet again with Maximilian. He tells them that as middlemen they must buy the book from him for a million dollars and then they can have it to sell to the collector for 2.5 million. The Curator asks Penelope for the cheque, and tells her to come back tomorrow for the book. When they return the next morning, the Curator's apartment is empty. He appears to have gone and taken the money with him. Stephen and Bloom tell Penelope to give it up as a lost cause; however, she decides that they should steal the book themselves. Bloom doesnt want to do it, but Penelope is insistent. The group hatches a plan to steal the book.
The plan is for Bang Bang to place some explosives in the Prague Castle which are small enough to only set off the fire alarm and make everybody evacuate the building. However, Penelope accidentally puts the remaining brick of plastic explosive in the wrong bag. When Bang Bang clicks the pen/trigger, an entire tower is destroyed, resulting in the military being called in. Penelope, unaware of the military presence, enters the museum nonetheless. She retrieves the book but messily tries to escape through a ventilation shaft, which gives out under her weight and drops her into a room filled with armed soldiers. The Brothers Bloom and Bang Bang watch as she is driven away in the back of a police car - which stops just past them and lets Penelope out. No-one can figure out what she said to convince them that she was there for legitimate reasons.
Later that evening in the Prague hotel, Bloom is sitting at the bar, drawing a picture of Penelope. As he is sketching from memory, their former mentor, but current enemy, Diamond Dog (Maximilian Schell) appears. He warns Bloom that since Stephen won't be around to help him with the cons forever, Bloom should join him. Bloom turns down the offer and it is implied that he loved Bloom in a physical sense the way he begins to touch his leg. As Diamond Dog advances on Bloom, Stephen arrives and smashes a bottle on the counter and cuts Diamond Dog's hand with it. The Brothers make their exit.
The party travels to Mexico for the conclusion of the con. Bloom and Penelope develop their relationship further. Bloom is legitimately in love with her. When they arrive in Mexico, Bloom acts on his feelings and tells Penelope she is being conned, and that it was led by Stephen. He takes her to get her money from Stephens room, but Stephen is waiting for them in a chair. He tells Bloom that he is disappointed. A fight develops between Stephen and Bloom and a gun is accidentally knocked down and discharged. Stephen appears to be shot and is dying in Bloom's arms. Penelope checks out the wound and realizes that it's fake blood and that she is being conned again, and leaves with a broken heart.
Three Months Later Penelope is writing a letter on her veranda and clicks her pen. Her mansion explodes and she walks away. She travels to Montenegro to find Bloom. Penelope wants to run a con because she thinks it will be fun. Bloom is shocked and upset. He finds out that Bang Bang gave Penelope her cell number and helped to find him. Not able to deny his love for her, he meets with Stephen to set up one final con to end it all, for Penelope's sake.
The brothers set off to St. Petersburg for their final con. It involves selling the book to the Russian mob which includes all of them getting ambushed and killed. Bloom is to get shot helping Penelope escape. To pull this off, Stephen is forced to hire Diamond Dog to assist them, since he is the leader of the only Russian mobsters willing to deal with con men. They expect to make $1,750,000 off Penelope.
The plan goes awry however, when they are ambushed by Diamond Dog's Russian gang while headed for the initial exchange. They are shot at and the car is run off the road, They hit a tree and narrowly escape before the car explodes. Bloom passes out just as figures approach. When Bloom comes to, he is told by Penelope that Stephen is missing, however they do find his notebook. The notebook contains a ransom note asking for $1.75 million.
The two of them meet with Bang Bang in a parking lot. Bloom confronts her about what is going on. He asks if this is part of Stephens con, but she just looks sad as she shakes his hand and gives him a farewell note. She appears to get into her car, which immediately explodes.
Penelope transfers the funds to the kidnappers.
They are told to go to an old burned out theater. Bloom enters with Penelope waiting for him outside in the car. He is surrounded by darkness. A spot light snaps on and Bloom finds Stephen tied up and beaten severely. Stephen tells him not to move since the gang is calling to see if the money was wired through. Bloom sees a shadowy figure standing behind Stephen who raises his gun and points it at Stephen before shutting off the light. Bloom points his own gun at the man and fires several times. A fierce gun battle occurs between the two until Bloom is bathed in light by a hole in the ceiling, giving the Russian the upper hand. Stephen tackles Bloom out of the way, taking a bullet to the gut in the process. Before Bloom can chase the assassin, Stephen succumbs to his injury, goes into a seizure and collapses on the floor. A horrified Bloom asks Stephen whether this was real, or just the "perfect con." Stephen jumps up and tells Bloom it was all a con. Stephen then tells Bloom to think of a card out of a deck. Stephen reveals the Queen of Hearts and Bloom responds with "That's the best card trick I've ever seen," fulfilling a pseudo-prophecy made by Stephen earlier in the film. Stephen tells Bloom to go, and leave St. Petersburg forever with Penelope and that they'll "meet again sometime." Stephen hugs his brother, covering Bloom in blood, and Bloom leaves the theater.
Bloom and Penelope drive away in the car and Bloom falls asleep. When he wakes up they have left Russia behind them. However, Bloom notices that Stephens blood stain on his shirt has turned from red to brown. The blood is real. Bloom, realizing what actually happened, breaks down on the side of the road while Penelope is trying to comfort him. The scene changes back to Stephen, who is dragging the chair to the center of the stage. Still bleeding from the gunshot, he slowly sits down, pushes the Queen of Hearts up his sleeve (suggesting he knew what card Bloom would be thinking about), and dies. Penelope tells Bloom what Stephen once told her, "That there are no such thing as unwritten life. Just a badly written one." She tells him that they're going to live like they're telling the best story in the whole world. As they're leaving, Bloom reminisces about another thing Stephen had once told him, "The perfect con is one where everyone involved gets just the thing they wanted." For Penelope and Bloom, what they wanted was life with each other, while for Stephen it was to write a con so perfect it became real, and, like their first con, left everyone involved happy in the end. Bloom and Penelope drive off into the distance as the sun sets.