Louis Winthorpe III (Dan Aykroyd) is a respected senior employee of the Dukes who manages their Philadelphia commodities brokerage firm, Duke & Duke. His bona fides are impeccable, having attended Exeter and Harvard. Louis has reached the ideal level of detached self-satisfaction, complete with the superficial fiancée, Penelope. However, the Dukes arrange to shatter Louis' reputation by having one of their operatives, Clarence Beeks (Paul Gleason), "expose" him as a petty thief. As Louis is processed in jail (in a scene featuring a cameo by Frank Oz), Louis finds that another item has been planted in his clothing — a cellophane bag containing angel dust. Louis does not fare well in jail — by the time Penelope arrives to post bail, he is disheveled, bruised, black-eyed and cut, his tailor-made suit stolen from him. When he finally appears to convince Penelope he has been falsely accused, a prostitute, Ophelia (Jamie Lee Curtis), lustily kisses Louis and begs him for a dime bag, promising to "do all the things he likes."
Penelope flees in a state of shock, while Ophelia explains to Louis that someone (Beeks) paid her so Louis would enjoy the "prank." His life continues to deteriorate. He soon discovers that his bank accounts have been frozen and he has been locked out of his home by his devoted butler, Coleman (Denholm Elliott), who is unhappily forced to take part in the Dukes' plan since he is technically in their employ. Ophelia takes pity on the broken Winthorpe and takes him back to her apartment. At first she makes him sleep on the couch, as her bed is to be used "for business only." However, he suffers a horrible cold and she does not let him leave her bed, going as far as to cancel appointments for him.
Meanwhile, street hustler Billy Ray Valentine (Eddie Murphy) had been arrested when he accidentally bumped into Louis (before his downfall), his innocent action perceived as a robbery attempt, with Winthorpe stating he "wants to press full charges." When Billy Ray is briefly jailed, he attempts to intimidate his hulking cellmates with his purported karate abilities, such as the Quart of Blood Technique. The Dukes bail him out and invite him into their limousine, and then into their supposed program that assists underprivileged members of society.
Billy Ray is brought to his (formerly Louis') new house and eventually accepts his new luxury, inviting all of the patrons from his favorite bar back to the house for a party. However, Valentine already starts to show signs that he has been changed by wealth, and is dismayed as the crowd of pimps, prostitutes and hustlers run riot through the house. Condemning his guests as freeloaders, he puts an end to the party. Valentine also begins to form a friendship with Coleman, whom he thanks for his hard work (something which Louis did not do).
On his first day at his new job, the Dukes give Billy Ray a brief primer on their business, explaining the concept of commodities in the simplest possible terms. Billy Ray catches on in that the Dukes "make bets" and invest money on behalf of clients on whether futures will go up or down, comparing them to bookies. Eventually, Billy Ray's real-world perspective proves to be an accurate predictor of a commodity's movement.
Both characters' plights come to a head during a Duke & Duke Christmas party. Much to Mortimer's chagrin, Louis shows up dressed in a soiled Santa Claus costume, attempting to steal food at the buffet and frame Billy Ray by planting drugs in his desk drawer, also brandishing a pistol. When he flees in a drunken stupor, the Dukes see that Louis has hit rock bottom, while Billy Ray has changed completely (he even brands Louis a "criminal," as Louis had called him earlier), and in a washroom conversation, Mortimer concedes defeat in the bet and pays the "usual amount" of their wagers: one dollar. Billy Ray, who was hiding in a bathroom cubicle to smoke a cannabis joint that Louis had tried to plant in his desk, overhears the conversation and learns that the Dukes plan to push him back on the streets, while deciding not to restore Louis to his position, since his actions as a street person disgusted them. The Dukes reveal their true opinion of Valentine, when Mortimer remarks in the washroom: "Do you really believe I would have a nigger run our family business, Randolph?"
Realizing that both he and Louis have been used, simply for the amusement of the Dukes and that, no matter who wins, the two will both be on the streets by the end of it, Billy Ray follows Louis back to Ophelia's apartment. Louis, hitting "rock-bottom" (after people refuse to sit next to him in a bus, look at him disdainfully, refuse to make eye contact, a dog urinates on him and it starts to rain), attempts suicide with his pistol. He even fails at this, as the pistol jams before it can fire, and then discharges when he throws it away. In utter despair, Louis then attempts suicide again, this time with an overdose of pills, and collapses.
Louis is brought back to his original home and is nursed back to health, at which point Valentine, Coleman, and Ophelia inform him of the true nature of the Dukes' nefarious scheme. Louis becomes enraged as he realizes the Dukes abused their power and destroyed his life just for one dollar. The four plan their revenge. At first, Louis plans to shoot them in the knees with a double-barrel shotgun, but is talked out of it by Billy Ray, who theorizes that "the best way to get back at rich people is to turn them into poor people". Billy Ray and Louis have learned of the Dukes' plan to purchase (through Beeks) an advance copy of the official orange crop report, to help them manipulate the orange juice market. Their elaborate scheme to steal this report from Beeks nearly backfires, as Beeks sees through their disguises and holds them at gunpoint, but is knocked out by a gorilla. The four manage to steal the real crop report from Beeks and epoxy him in a gorilla suit and lock him in the same cage as the gorilla. The real gorilla falls in love with Beeks in his gorilla disguise who is unable to speak clearly enough to make anyone listen to him. A false report is delivered to the Dukes. Pooling as much money as possible, including the life savings of Ophelia (who has by now become romantically attached to Louis) and Coleman, the money the Dukes paid for the fake crop report and their own investments, Billy Ray and Louis head to the New York Board of Trade at 4 World Trade Center to execute their plan. With their knowledge of the actual crop report and the Dukes' misplaced trust in the fake crop report, their strategy to short the market goes off with flying colors, resulting in an incredible (undisclosed) amount of wealth for Louis, Billy Ray, Ophelia and Coleman and a $394 million margin call for the Dukes. Approached by the incredulous, indignant, and now-bankrupt Duke brothers, Billy Ray, just to rub in their misfortune, tells them that he and Louis made a wager: Louis believed that they couldn't send the Dukes onto the streets and get rich at the same time, while Billy Ray bet that they could. And Billy Ray says, "I won," and that the wager was one dollar. Distraught at the thought of being duped by a street hustler, and their new found life of poverty, Randolph suffers a heart attack.
Meanwhile, a weary Clarence Beeks is still in the cage with the real gorilla which is being loaded on a ship for Africa.
The movie ends with Billy Ray, Louis, Ophelia and Coleman enjoying a lavish tropical vacation.