Ned (Paul Rudd) is a hippie selling produce at a local farmer's market. The daughter of one of his customers is eating a strawberry that she did not purchase, and her father chastises her for it. Ned calls out to her after her father leaves and gives her a pint of strawberries for free. Ned is then approached by a uniformed police officer, who asks him where he can buy some weed. Ned says he obviously wouldn't tell him even if he knew where to procure such an item. The cop then says he's just had a really bad week, and Ned takes pity on him, slipping him a small bag of marijuana with a stalk of rhubarb free of charge. The officer insists on paying, and Ned agrees to accept 20 dollars for it. After Ned takes the money, the officer says he is under arrest. Ned thinks he is kidding, but soon finds out that the officer is quite serious. Ned realizes (too late) how much of an idiot he is to have fallen for this police sting.
Next we go to brief scenes of three different women; Miranda (Elizabeth Banks) comes back from a boring date and calls her neighbor (Adam Scott) to ask for help with her pilot light. Even though her neighbor is starting to have sex with another girl, he runs up to help her.
Natalie (Zooey Deschanel) is telling sex-heavy jokes on stage at a small and nearly deserted comedy club, populated mainly by her lawyer butch lesbian girlfriend Cindy (Rashida Jones) and Cindy's law firm co-workers.
Liz (Emily Mortimer) shyly tries to wow her husband Dylan (Steve Coogan) by flashing him her new Brazilian wax, but he seems rather disinterested.
After eight months in prison, Ned is released on good behavior. He returns to his farm to find out that his girlfriend, Janet, is now dating a new guy named Billy. Ned wants to remain working on the farm, but Janet refuses. She also will not let him take his dog (named Willie Nelson) with him. Billy drives Ned into town and after a sad farewell with Willie Nelson, Billy is moved and tells Ned that he'll convince Janet to rent out the goat barn to him for $500 a month if he can provide her with two months' rent.
Instead Ned moves in with his overbearing, neurotic mother Ilene (Shirley Knight), who hosts a family dinner every week, where we discover that the three women shown earlier are Ned's sisters. Ilene is clearly uncomfortable with the scene around her which involves Dylan and Liz bickering with each other; Natalie and Cindy frequently showing their loving affection with hand-holding and lip-smooching (apparently Ilene never recovered from her personal shock after Natalie came out-of-the-closet about her true sexual orientation years earlier); and with Miranda being single and always talking about business. The sisters are not interested in sticking around after dinner, but as Liz leaves, she mentions to Ned that her door is always open for him if he needs a place to stay.
The next day, Ned meets his parole officer. He believes that their relationship is like a free therapy session from the state of New York, though his parole officer does not offer much in the way of therapy. Ned struggles to come up with answers to how he will avoid staying out of trouble, other than no longer working on the farm. The parole officer says he will record that as "avoiding former criminal associates". Ned says he will think of more answers before their next session.
Tired of staying with their mother, Ned shows up at Liz's apartment in downtown New York City where he is put up in a bunk bed shared with Liz's 10-year-old son, River. Ned will be paid $250 a week to look after River, as well as babysit their youngest daughter, only a few months old, and help Liz's husband, Dylan, with his documentary film. Ned takes River to dance class, but River is clearly more interested in the karate class next door. At home, Ned shows him 'The Pink Panther' (the original version). He is shocked that River has never seen it, but River replies that his parents will not let him watch violent movies. Ned says that it is not violent, and then proceeds to horse around with him using karate moves. Dylan comes into the room upset that his son is up after 10 p.m. and that Ned is using the laptop for something other than typing a resume.
Ned goes to work with Dylan the next day. He is getting permission from the ballerinas to appear in Dylan's documentary about the Belarussian ballerina Tatiana. Dylan is annoyed when the absent-minded Ned walks in front of the camera, goofs off with Tatiana, and tells her that Dylan is married.
Later, Miranda and her neighbor are nervously awaiting Ned's arrival to drive her around New York City for her interview with Lady Arabella for Vanity Fair. She wants Ned to not talk to her interviewee, but Arabella instantly takes an interest in Ned and his farming. Miranda is not allowed to ask about Arabella's infamous relationship with her ex, though her task is to somehow pry the information out of her. Instead, the interview revolves around Arabella's charity work.
Meanwhile, Natalie has been doing some nude modeling for an artist named Christian (Hugh Dancy) with whom there is an obvious mutual attraction (Ned also does a bit of modeling for Christian to earn some extra money). Christian insists that the two of them come to a self-help group meeting with him. After listening to some testimonials, the group moves to a sweat tent known as the "win room". Participants are given water after sharing a personal story. Natalie is given water, and Ned is desperate to get some water as well but cannot tell a story. After being refused, he ends up passing out and being taken away in an ambulance. Natalie and Christian head home in a taxi and end up having sex in Christian's apartment. The next morning, Natalie feels guilty about her cheating on Cindy. At their loft in Brooklyn, which they share with four or five other people, Natalie tells Cindy that she loves her. Caught off-guard by Natalie's unusual affections, Cindy tells Natalie that she loves her too and leaves for work at her lawyer's office.
A few days later, Ned helps Dylan unload some camera gear but is told to stay in the vehicle while Dylan conducts a very private interview with Tatiana. Ned reads a book as day turns to night, and is frightened when a police car comes up behind him. He immediately declares that he is on parole. The officer says that he is parked in a 24-hour tow zone. Realizing that he doesn't have the car keys, and that Dylan has been gone for over six hours, Ned runs upstairs, where discovers Dylan and Tatiana naked in the studio. Ned freaks out as he suspects that Dylan is cheating on Liz with Tatiana, but Dylan says that he was only naked so that Tatiana would be more comfortable when she reveals deeply personal secrets. Ned seems to accept this.
Another few days later, Ned and Miranda attend Arabella's charity event, at which Miranda had hoped to get more information out of Arabella as her boss has threatened to kill her boring piece on Arabella's charity, but Arabella quickly passes by Miranda and heads over to talk to Ned. Ned and Arabella end up alone, and Arabella opens up about her relationship. Ned asks her out, but she politely declines.
When Ned and River act out a Cato and Clouseau attack scene a la The Pink Panther, Ned ends up accidentally breaking one of River's fingers. At River's private school interview, he does not wish to talk about the unique instrument he has learned and dance classes, but rather about his enthusiasm for a type of martial arts that his recently released uncle found on YouTube. When asked about why the uncle was in jail, Dylan quickly interjects that Ned was protesting whale slaughter in Japan. River says he thought Ned was in jail for selling drugs to a cop. Liz and Dylan clearly blame Ned for River's interview performance, and kick Ned out of the house. Ned defends his behavior, but Liz will not listen. She does give him a bit of money before sending him away in a taxi.
Ned ends up at Miranda's house, who prefers giving him the rest of the money for rent at the goat barn to having him stay with her. Ned casually mentions Dylan's naked interview with Tatiana, and Miranda immediately reaches the obvious conclusion that Dylan is having an affair. Miranda immediately calls Natalie to tell her this news. The neighbor shows up and he and Ned bond. While Miranda is on the phone, Ned mentions a detail of Arabella's relationship that was not public, upon which Miranda hangs up and demands more information, which Ned reluctantly provides. Ned heads out to the farm but finds that Billy has not asked Janet about his staying in the barn, and Janet will neither let him stay nor let him take Willie Nelson, whereupon Ned returns to New York and to Miranda's couch.
Ned attends a party at Natalie's apartment. Ned meets with Cindy where they talk and she suggests a plot to abduct Willie Nelson while Janet is at a Dixie Chicks concert. Ned hears a Willie Nelson remix playing outside, takes it as a sign, and starts to dance. A woman (one of Natalie and Cindy's roommates) approaches to dance with him, and another man comes up and dances behind him. They say that they want to have sex with him. He starts out with the woman, but gets freaked out when the guy starts to kiss him.
At lunch the next day, Ned explains his situation to Miranda's neighbor, Jeremy, who says they must find him a girl, and they start to look around the restaurant. One patron reminds Jeremy of Miranda, and Ned opines that Jeremy is clearly in love with Miranda. Jeremy says he is not interested in her, and gives several reasons why. Ned later questions Miranda about Jeremy, and she also gives reasons why she is not interested. Miranda gets upset when Ned tells her why Jeremy is not interested in her, and confronts Jeremy about his comments. Jeremy and Miranda then turn on Ned, who continues to slightly misstate their previous words. Before storming out, Jeremy throws Miranda's article on Arabella at Ned, saying he should read it.
Meanwhile, Natalie discovers that she is pregnant after her one-night stand with Christian. As she performs at her comedy club that evening to an audience including Cindy and Ned, Christian walks in and she runs off stage to throw up in the toilet. When Ned checks on her, she tells him about her dilemma. He says that it is best to inform Cindy and that if they are truly in love they will weather the storm. Natalie tells Ned that she will tell Cindy at a time of her own choosing.
The family is gathered together with Ned, Cindy, and River on the trampoline outside and the sisters in the kitchen. Liz talks about her marriage, and Miranda brings up what Ned told her about Dylan and Tatiana having an affair. Liz is in denial and blames Ned, but her sisters ask her why she no longer dresses attractively. Liz says that Natalie is the promiscuous one, which causes Natalie to storm out. In tears, Liz goes outside and takes River, meanwhile chastising Ned for his immature behavior. Liz confronts Dylan and asks him if she has been cheating on her with Tatiana. But rather than admitting the affair, Dylan turns it back on her, attacking her mousy, passive-aggressive tactics. Dylan says he would rather leave her than have their children overhear him be compelled to fight with her.
The next day, Miranda takes Ned into the Vanity Fair office to sign off on the validity of Arabella's story, but Ned is upset that his sister is using the information he gave her. Miranda says he never told Arabella they were on the record, but he counters that he is not a reporter and she made it clear to Arabella they were not a team. He refuses to corroborate her story even though it is of great professional cost to his sister.
Ned is now staying with Natalie and her roommates at her Brooklyn loft. When he asks her how it went with Cindy, she implies that she has told her the truth without really confirming it. While it seems clear that Natalie did not tell Cindy about being pregnant, Ned accepts her statement at face value.
The following night, Cindy and Ned drive to the farm to abduct Willie Nelson. They see that Janet and Billy are still home, but after the couple goes outside they continue with their mission. As they sneak into the house, Ned mentions how glad he is that Cindy and his sister stayed together. Cindy thinks he is talking about something else until Ned mentions infidelity, and then brings up the baby. Cindy calls Natalie, and when Janet hears the noise she returns to the house. Cindy walks out, still screaming on the phone, and speeds off in the car, leaving Ned behind.
Ned is now back living with his mother, and goes to check in with his parole officer. Ned thanks him for his hard work, but goes on to say that all of the stress caused him to break down and smoke a joint with a neighbor. The parole office has no choice but to report him.
The sisters and River come over for another family night, and the girls are obviously displeased with Ned, preoccupied, and disinterested in the family game of Charades. Ned finally has an outburst, screaming and cursing at his sisters for being so self-centered, self-absorbed, and negative. The family is shocked that the always laid-back slacker Ned has exploded in anger. The doorbell rings and Ned answers to find his parole office and a police office there to arrest him. Miranda posts bail, but Ned decides to stay in jail. River says he knows how to get Ned to agree to sign the release form, and they make a U-turn and head out to get Willie Nelson back from Janet at her farm. Janet still refuses, saying she loves the dog. Miranda says nobody could possibly love anything as unconditionally as Ned does and that the dog truly belongs with him. While Janet remains unmoved, Billy and Ned's mother come out of the house with the dog and put it into the car. Willie Nelson runs down the hallway of the jail to Ned's cell, where Ned is overjoyed to be reunited with his dog. Miranda finally realizes that she belongs with Jeremy, and runs down to him in her sweats. River is seen wearing a karate outfit, with Liz encouraging him.
In the final scene, Ned is eating lunch with all three sisters. Miranda and Jeremy seem to be doing well as a couple, and Liz has started to date again. Natalie gets a call from Cindy, who wants to go to the OB/GYN with her. Ned decides that the city is not a fit for him and Willie, and says it is time for him to go. Ned and Billy open up a handmade candle shop and say they should thank Janet for getting them together. Ned then wonders where Willie Nelson is, and he finally finds him with another dog in a park. The other dog's owner rounds the corner, and it is clear that the two humans have something in common. She says that her dog is named Dolly Parton. He responds that his is Willie Nelson, and they smile.
During the closing credits, there are film outtakes and bloopers from throughout the movie.