In the bustling metropolis of New York City, two aspiring singer/songwriters, Chuck Clarke and Lyle Rogers, find themselves captivated by the dream of success as they gaze into the window of a Sam Goody record store. Chuck is convinced that the only thing separating them from music legends like Simon and Garfunkel or Bruce Springsteen is the crucial presence of an agent. Eager to make their mark, he invites talent agent Marty Freed (played by Jack Weston) to see them perform at Song Mart. However, Marty's feedback sends them reeling; he informs them that their performance lacks the necessary stage presence and "shtick."
Determined not to give up, Chuck and Lyle, under the name 'Rogers and Clarke', take a crack at a familiar song, complete with awkward dance moves at a local nightclub. Their attempt receives a cacophony of boos, yet Marty surprisingly offers them two bookings—one in Honduras, a hotel popular among American journalists, and a longer engagement in Morocco. The duo contemplates Marty’s proposition while reflecting on their journey over drinks at a nearby bar.
Flashbacks reveal Lyle's struggles five months prior, where he juggled driving an ice cream truck and writing lyrics; he plays his new songs for his increasingly speechless wife, Willa (Tess Harper). Meanwhile, Chuck entertains patrons at a restaurant, where a waiter delivers a note from Lyle praising his performance. Their encounter sparks an instantaneous bond, catalyzing an intense collaboration. Their commitment to songwriting, however, comes at a personal cost; Willa grows tired of neglect and leaves Lyle, plunging him into despair, which Chuck helps him navigate. Their troubles worsen when Carol (played by Carol Kane), Chuck's girlfriend, also feels overlooked and eventually departs from him. In a dark moment, Chuck threatens suicide to get Lyle's attention, leading to a dramatic rooftop confrontation with the police. As Lyle rushes to save his friend, Rabbi Pierce helps to de-escalate the situation, guiding Chuck back inside.
Returning to the present-day bar, Chuck reflects on their trials and resolves to take their act to Morocco, setting the stage for the wild adventure that follows.
In Ishtar, Morocco, a desert archaeological camp meets chaos as it is attacked. Professor Barnes instructs his associate Omar (J.C. Cutler) to flee with a crucial newly discovered ancient map, capable of inciting unrest in the Middle East. With Omar's dying wish that the map will be guarded by “two messengers of God,” he entrusts it to his sister, the leftist French-Moroccan agent, Shirra Assel, just moments before his demise.
At the Ishtar airport, Shirra, disguised as a man, cunningly persuades Chuck to switch passports and suitcases to enable her travel to Marrakesh. She emphasizes, > "It is a matter of life and death." When they realize the embassy won’t replace passports in a timely manner, Chuck convinces Lyle to take their act to Marrakesh while he stays in Ishtar.
Meeting an American named Jim Harrison (Charles Grodin) at the Marakesh Hotel, Lyle unwittingly plunges into a world of intrigue as Jim reveals he is with the CIA, aiming to thwart a potential communist coup in Morocco. Lyle's solo performance of "Bridge Over Troubled Water" is met with indifference, but when Chuck swoops in and revives the act with show tunes, their popularity surges.
After a series of complications, including Lyle's accidental involvement with Shirra and the CIA's increasing suspicions, the two friends find themselves embroiled in a whirlwind of danger and deception. They embark on a bizarre chase through the Moroccan desert, facing kidnappers, absurdly mistaken identities, and a quest for survival that pushes their creativity to the limits.
While negotiating for a blind camel, Lyle learns about Shirra’s true intentions and is compelled to help her reclaim her map from the rogue CIA agents who have sinister motives. Against the backdrop of political tension and impending doom, Chuck and Lyle's comedic misadventures ultimately lead to them inadvertently becoming pivotal players in a much larger game of diplomacy.
As their journey unfolds, they navigate harrowing situations, from escaping kidnappers to encountering the ruthless Emir Yousef. In a thrilling climax filled with unexpected twists, the duo manages to outsmart the CIA and flip the script, delivering the ancient map back to the United States.
Now back in the friendly confines of New York, with their whimsical exploits behind them, Marty, the ever-ambitious talent agent, negotiates to promote Chuck and Lyle's music while ensuring significant reforms in Morocco are undertaken. The film closes on an uplifting note, showcasing their "Live in Concert" album proudly displayed in the window of Sam Goody, symbolizing a journey that, while fraught with peril, ends in triumph and a sense of belonging in the world of music.
