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A serial killer known as the "Party Crasher" (Stephen Lang) telephones the police, notifying them that he is about to murder another individual at a night club, daring them to stop him. Police converge on the night club, but the officers - including NYPD Lieutenant John Moss (James Woods) - are unable to stop the gunshot killing. The Party Crasher flees in the ensuing chaos, and Moss is thrown off a car while trying to stop the killer. While Moss has his injuries tended to, he barks some obscene comments at media members and cameras.

Out in Hollywood, Nick Lang (Michael J. Fox) is a rich and spoiled actor who is best known as "Smoking" Joe Gunn, the title character in a series of highly popular action films that seem to be Indiana Jones rip-offs. In order to be taken more seriously as an actor, he is vying for the leading role in the heavy cop drama Blood on the Asphalt. Lang vows to "prepare" for the role by attempting to be an actual cop. After seeing Moss's outburst on TV, Lang pulls strings with NYC Mayor David Dinkins to be assigned as Moss's new partner on the force. Moss wants no part of the deal, but is forced to comply by his captain (Delroy Lindo), who just happens to be a huge Nick Lang fan. To make matters worse, babysitting Lang means that Moss will have to be removed from the Party Crasher case.

Moss defies orders by continuing the investigation anyway and repeatedly trying to ditch Lang, whose constant questions and other annoying habits (such as mimicking all Moss's movements) nearly drive Moss insane. Lang wants to know what it feels like to be a cop and is quickly thrust forward into some serious situations he is not prepared for, while Moss constantly reminds him that this is not a movie. Meanwhile, as Moss makes progress on finding the Party Crasher, he is also trying to juggle a new romance with Susan (Annabella Sciorra). The divorced Moss is unable to communicate with her or open up, and Lang offers advice to him on how to interact with women.

Moss takes Lang to a dark building to catch a perp, ordering him to stay put and giving the actor a real gun in case of an emergency. Lang, however, does not stay put and enters the building, shooting a man who he believes is a criminal chasing Moss. The man is just an innocent bystander, though, and Lang is horrified. Moss agrees to cover up the act, and urges Lang to leave town immediately. Lang returns from the airport to the police station to confess his sins, only to see that the "dead man" is actually a fellow cop, alive and well. Moss engineered the whole stunt to get Lang out of town.

Lang tracks Moss down to seek revenge but ends up stumbling on a confrontation between Moss and The Party Crasher (during which he saves Moss's life). The Party Crasher is wounded, but he kills several people and escapes. After Moss is told by Susan that his unstable life as a cop will never allow them to have a relationship, he is unwelcomely visited by Lang. Lang predicts that The Party Crasher will follow storytelling protocol and seek out Moss's loved ones in this, the third act of their story together. Lang is right, and Susan is abducted. Moss and Lang confront The Party Crasher on a rooftop and battle it out. Susan is saved after Moss kills The Party Crasher, but Lang is shot in the shoulder, while saving Moss again. The movie cuts forward in time, revealing that Lang survived, and already filmed Blood on the Asphalt. Moss, reunited with Susan, watches the movie in a theater and comments that all Lang's lines were originally his.

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