Chicago, circa mid 1920s. Naive Roxie Hart (Renée Zellweger) visits a nightclub where star Velma Kelly (Catherine Zeta-Jones) performs (All That Jazz). Hart is having an affair with Fred Casely (Dominic West) in hopes that he will get her a gig as a vaudeville star. Velma is arrested after the show for murdering her adulterous husband and sister Veronica after finding them in bed together. After Roxie realizes that Fred won't help her break into show business, she kills him in a fit of rage and tries to make her simple-minded husband Amos (John C. Reilly) take the fall (Funny Honey). However, the police and Amos (realizing she has been unfaithful to him) see through her ruse and Roxie is arrested and sent to the Cook County Jail.

Once Roxie arrives and is booked, she is sent to Murderess' Row to await trial, under the care of the corrupt Matron "Mama" Morton (Queen Latifah), who supplies her girls with cigarettes and other materials if she's paid well enough (When You're Good to Mama). Roxie meets Velma in jail as the woman in charge, and learns the stories behind the other women in Murderess' Row (Cell Block Tango). Roxie decides that she wants Velma's lawyer Billy Flynn (Richard Gere) to get her off (All I Care About), and convinces her husband to talk to him. Billy decides to take Roxie's case and get her off by making her a star.

Flynn and Roxie manipulate the press at a press conference, reinventing Roxie's identity to make Chicago fall in love with her (We Both Reached for the Gun). Roxie becomes the new infamous celebrity of the Cook County Jail, much to Velma's horror and Mama's delight (Roxie). Velma, desperate to get back into the limelight, tries to talk Roxie into opening a vaudeville act with her once they get out of jail (I Can't Do It Alone). Roxie haughtily refuses and mocks Velma, since Velma mocked Roxie earlier. Roxie and Velma become locked in a rivalry to outdo each other in stardom. The tables are turned on both ladies, however, when a new killer named Kitty (Lucy Liu) - a wealthy woman who killed her husband and both of his mistresses - enters the scene.

Roxie manages to steal back attention by claiming to be pregnant, which is falsely confirmed by a doctor (whom she seduced), much to Amos' delight; however, nobody notices that he even exists (Mister Cellophane). A Russian inmate, who is innocent of the murder of which she was convicted, is hanged after losing her final appeal, which fuels Roxie's desire to be free. Roxie's trial date approaches, and she and Billy begin to plan their strategy to find her innocent of murder using her star power and sympathy vote (Razzle Dazzle). Her trial proceeds and becomes a media spectacle, fed off the sensationalist reports of radio personality Mary Sunshine (Christine Baranski). The trial goes Roxie's way, until Velma shows up with Roxie's diary and, in exchange for amnesty, reads incriminating entries that Roxie claims to never have written. Using some quick talking, Billy manages to get Roxie off the hook and she is proclaimed innocent. However, Roxie's publicity is short lived: as soon as the trial concludes, the public's attention turns quickly to a new murderess. Roxie leaves the courthouse after discovering that Billy wrote the false diary entries, and sent the journal to Velma to get Miss Kelly off death row. Roxie reveals to Amos she faked her pregnancy for the fame and he finally leaves her.

With nothing left, Roxie once more sets off to find a stage career, with little success (Nowadays). But she is soon approached by Velma, who is willing to revive a two-person act with Roxie. Roxie refuses at first, because of the hatred that they share for each other, but relents. The two murderesses, no longer facing jail time, finally become the enormous successes they have been longing to be (Nowadays/Hot Honey Rag).

The movie is based on the Kander and Ebb Broadway musical, Chicago, which was based on the Maurine Watkins play, Chicago, which was in turn based on the stories of two Jazz-era killers, Beulah Annan and Belva Gaertner.

The film follows a similar plot to William Wellman's 1942 film Roxie Hart, starring Ginger Rogers as Roxie and Adolphe Menjou as Billy Flynn. However, the only singing or dancing were performances by Rogers.

The film was to have been the next movie project for legendary stage and film choreographer and director Bob Fosse, who directed and choreographed the original Broadway production. Although he died before the film was made, the influence of his distinctive jazz choreography style can be detected throughout the film. In particular, the parallels to Cabaret are numerous and distinct. He is thanked in the movie's credits.

The satiric presentation of a criminal underworld that mirrors the "respectable" world of daily life goes back to The Beggar's Opera.

The film is based on the hit musical Chicago, the original Broadway production of which (in 1975) was not well-received by audiences due to the show's cynical tone. The minimalist 1996 revival was much more successful, however, and the influences of both productions can be seen in the film version. The original production's musical numbers were staged as vaudeville acts; the movie respects this but presents them as Roxie's fantasies, while scenes that take place in "real life" have a hard-edged realism.

Chicago was produced by the American companies Miramax and The Producers Circle in association with the German company Kallis Productions. Chicago was filmed in Toronto, Ontario, Canada. The courthouse was in Osgoode Hall. Other scenes were filmed at Queen's Park, former Gooderham and Worts Distillery, Casa Loma, the Elgin Theatre, Union Station, the Canada Life Building, the Danforth Music Hall, and at the Old City Hall. All vocal coaching for the film was led by Toronto-based Elaine Overholt, whom Richard Gere thanked personally during his Golden Globe acceptance speech.