Melvin Udall is an obsessive-compulsive and misanthropic novelist with a sharp tongue who seems to take pleasure in insulting and upsetting those around him. When he's not busying himself with the rituals of his disorder, Melvin writes romance novels that contrast starkly with his abrasive demeanor. Despite his success, Melvin's life is solitary and rigid, interrupted only by his regular restaurant visits where he insists on being served by the same waitress, Carol Connelly, the only person who tolerates his behavior. Carol, a single mother, struggles with life's challenges, including caring for her asthmatic son, but she faces Melvin's antics with patience and a certain kind-heartedness that catches even her off guard.

Melvin's life is further complicated when his gay neighbor, Simon Bishop, an artist, is brutally assaulted in a robbery. Simon's agent insists Melvin look after Simon's dog while Simon recovers. Initially resistant, Melvin forms an unexpected bond with the pet, which starts to humanize him. Meanwhile, faced with her son's escalating medical issues, Carol takes leave from work, disrupting Melvin's routine. Confronted with the possibility of never seeing Carol again, Melvin's newfound attachment to both the dog and Carol lead him to step outside his comfort zone, setting him on a path where he has to contend with his weaknesses and forge new relationships.