Newton Davis, portrayed by Steve Martin, is an architect grappling with his career as he struggles to express his ideas at work. His colleague, Marty, easily climbs the corporate ladder despite Newton's criticism of their work, which he calls "cookie cutter." After crafting his dream home for his girlfriend, Becky, Newton is devastated when she declines his marriage proposal, leaving him unable to face the house that now feels like a burden.
Months later, while dining at a Hungarian restaurant in Boston, he meets Gwen, initially believing she doesn’t understand English. He spills his heart out about his failed relationship and the neglected house, only to later discover that she was only pretending to be Hungarian. This leads to a night of unexpected intimacy. The next morning, however, Gwen finds herself alone when Newton leaves unexpectedly, but not before she discovers the house drawing he left behind.
Intrigued, Gwen visits the house and, enchanted, decides to move in. She cleverly begins making purchases under Newton's name, claiming to be his wife, which takes everyone by surprise, especially Becky when they meet again at the local store. With her charm, she manages to impress Newton's heartbroken parents, George Davis and Edna Davis, who unknowingly embrace her as their new daughter-in-law.
Upon returning to his hometown, Newton is startled to find his house occupied. As he confronts Gwen about her deceit, he realizes her presence may be beneficial. Gwen starts mending his relationship with his parents and even helps him reconnect with his boss, Moseby, highlighting his neglected capabilities while also inciting jealousy in Becky.
A strategic agreement is formed: Gwen will assist Newton in winning back Becky, and in exchange, she will claim the house's furniture. They create an elaborate ruse, including a staged fight that reveals Newton’s lingering feelings for Becky. Yet, as their arrangement progresses, both Newton and Gwen find themselves developing deeper emotional ties to each other, complicating their initial plan.
As the story unfolds, Newton's complex interactions with both women lead to misunderstandings. After an encounter with one of Gwen's friends reveals more about Gwen's troubled past, Newton learns about her propensity for lies as a means to cope with her upbringing. In the meantime, Newton's intimacy with Becky falters when she hesitates, not wanting to disrupt Gwen's life further.
The climax of the film unfolds at a house reception where all conflicts converge. Gwen employs two homeless individuals as her faux parents, enchanting everyone while Newton impresses Moseby with his visionary ideas. However, tension peaks when Gwen confronts Becky about her attempts to reclaim Newton, igniting a heartfelt outburst that forces her to exit the scene in tears. Surprised by her emotional vulnerability, Newton begins to see beyond their arrangement.
Outside, an awkward moment gives way to genuine recognition of their feelings; Gwen wanted more than a charade. Just then, with a promotion from his boss on the horizon, Newton is faced with a choice when Becky questions the truth behind Gwen’s tales, to which he affirms their authenticity.
In a critical turn of events, Newton chases after Gwen, who is about to leave town. He bravely spins one last romantic tale to persuade her to stay, leading to their joyful reunion. The film concludes on a whimsical note with Newton and Gwen entering their home hand in hand, saying, “I love you, Gwen,” to which she humorously replies, “Actually, it’s Jessica.”
