George Bluth Sr., patriarch of the Bluth family, is the founder and former CEO of the Bluth Company, which markets and builds mini-mansions, among other activities. George Sr. is arrested by the Securities and Exchange Commission for defrauding investors and gross spending of the company's money for "personal expenses". His wife Lucille becomes CEO, and immediately names as the new president her youngest son Buster, who proves ill equipped. Seeing no other options, the family turns to Michael, the middle son, and twin to the Bluths' only girl, Lindsay, giving him control of the company. To keep the family together, Michael convinces his son and sister's family to live together in a Bluth model home.

Throughout the first season, different characters struggle to change their identities. Buster works to escape from his mother's control through brotherly bonding and love interests such as Lucille Austero. George Michael nurses a forbidden crush on his cousin Maeby, while continually trying to meet his father's expectations. Lindsay's husband Tobias, a psychiatrist who has lost his medical license, searches for work as an actor, with the aid of Carl Weathers. Michael falls in love with his older brother Gob's neglected girlfriend Marta, and is torn between being with her and putting "family first". After he quarrels with Gob, Marta realizes that they do not share the same family values, and she leaves them both. To spite Buster, Lucille adopts a Korean son whom she calls 'Annyong' after she mistakes the Korean word for 'hello' as his name. Through an escalating series of dares, Gob gets married to a woman he just met, played by real-life wife Amy Poehler, but cannot get an annulment because he refuses to admit that he did not consummate the marriage. Kitty, George Sr.'s former assistant, tries to blackmail the company. She is caught in the Bluth family yacht's explosion, as used in one of Gob's magic acts, but survives. After previous failed attempts, and a brief religious stint in Judaism, George Sr. finally escapes from prison by faking a heart attack. It is also revealed that George committed "light treason" by using the company to build mini-palaces for Saddam Hussein in Iraq.

Because of his father's latest lie about a heart attack, Michael decides to leave his family and company behind. Lucille appoints Gob to be the new Bluth Company president, but he proves incapable and the position reverts to Michael. George Sr.'s twin brother Oscar moves in with Lucille in an attempt to rekindle a previous love affair. After faking his death in Mexico, George Sr. returns to the family model home, where he hides in the attic. Meanwhile, Buster joins the army, but escapes serving in Iraq when his hand is bitten off by a loose seal. He bonds with his uncle Oscar, who is revealed as Buster's presumptive biological father. George Michael begins dating a deeply religious girl, Ann Veal; his father does not like her, and tries to disrupt their relationship. Michael fails to break them up, but George Michael sees a chance for his crush on Maeby to bear fruit, and the pair kiss while the living room of the model home collapses under them.

Covertly, Maeby becomes a film studio executive, and Tobias repeatedly paints himself blue in a futile attempt to join the Blue Man Group. Throughout the season, various blue paint marks can be seen around the family's house and on the back of Tobias's neck when not in full makeup. After being kicked out by Lindsay, Tobias dresses as "Mrs. Featherbottom" to be around Maeby, an explicit reference to Mrs. Doubtfire. Kitty returns to steal a sample of George Sr.'s semen to make her own Bluth baby. George Sr., in revenge for twin brother Oscar's affair with his wife, exchanges appearances with an unconscious Oscar, who is mistakenly sent to prison in the place of George Sr., who again flees.

In the third season, Michael once again begins searching for his runaway father. Gob gets an invitation to a father/son reunion outing, and believes it to be George Sr. trying to contact him. In reality, the invitation was meant to reunite Gob with Steve Holt, son of Eve Holt, a girl with whom he had slept in high school. Meanwhile, George Michael and Maeby deal with their previous kiss by avoiding each other.

George Sr., in an attempt to remain in disguise, joins the Blue Man Group. Michael discovers this, and arranges to have his father placed under house arrest. George Sr. claims that he was set up by an underground British group. Michael goes to Wee Britain, a fictional British-themed city district, to investigate, and in the process meets a new love interest Rita (Charlize Theron). Michael and the audience are led to believe that Rita is a mole for the underground British group, working for a man named "Mr. F." In the end of the episode titled "Mr. F," it is revealed that Rita is actually an MRF, or "mentally retarded female." The love-struck Michael proposes to her, and the couple run off to be wed. Michael finds out the truth about Rita. However, despite Rita's "condition," the family pushes him to go forward with the marriage because Rita is, in fact, quite wealthy and they desperately want the money. Michael is not persuaded, and gently ends the relationship just as he and Rita are about to walk down the aisle. Meanwhile, Tobias and Lindsay variously seek legal help from Bob Loblaw (Scott Baio) concerning their troubled marriage.

Disturbed by both Lindsay's and Tobias's advances, Bob Loblaw chooses to no longer represent the Bluth family. Attorney Jan Eagleman offers to represent the family, on the condition that they participate in a mock trial in a new reality courtroom show called "Judge Reinhold" and presided over by the very same Judge Reinhold. Michael uses an illegal threat from prosecutors to have the mock case "dismissed," while Gob and Franklin briefly appear in another eponymous courtroom show presided over by Bud Cort. Meanwhile, Maeby and George Michael perform in a mock wedding which is accidentally conducted by a real priest, and the two become legally married.

The family members are afraid to testify at the mock trial and later real deposition, so Buster fakes a coma, Lindsay and Lucille fake entering rehab, and Gob flees the country to perform in a USO Tour in Iraq. All of the deceptions are uncovered by the prosecution, and in Iraq, Gob is arrested for inadvertently inciting an anti-US riot. Buster and Michael travel to Iraq to rescue Gob, and while there, uncover evidence that the mini-palaces George Sr. built in Iraq were actually ordered and paid for by the CIA for wiretapping purposes. After this discovery, the US government drops all of the charges against George Sr.

To celebrate, the Bluths throw a shareholders' party on the RMS Queen Mary. During preparation for the party, it is revealed that Lindsay was adopted, meaning that George Michael and Maeby are not blood relatives. At the party, the Bluth's other adopted child, Annyong, reappears. He reveals that he is there to avenge the Bluth family's theft of his grandfather's frozen banana idea and his subsequent deportation, an event orchestrated many years earlier by Lucille Bluth. Annyong has turned over evidence implicating Lucille in the Bluth Company's accounting scandals. Before the police arrive, Michael and George Michael flee on Gob's yacht, the C-Word, and depart to Cabo with half a million dollars in cashier's checks, finally leaving the family to fend for themselves. However, it is revealed in the epilogue that George Sr. is also on the yacht, having lured his brother Oscar into taking his place once again. Also in the epilogue, Maeby tries to sell the television rights to the story of the Bluth family to Ron Howard, who tells her that he sees it as a movie rather than a series.

In light of FOX's possible cancellation of the show, the first episode of 2006 parodied various gimmicks that other shows had used during November sweeps in 2005. Thinly-veiled allusions were made to the possibility of HBO or Showtime picking the show up in the event of its cancellation. The episode took shots at frequently cited reasons for the show's failure in the ratings, such as complex storylines that can be hard to follow, obscure references that may go over viewers' heads, and main characters who were not sympathetic or relatable.