As the film begins, Joe Buck (Jon Voight), a young Texan dishwasher, sets off on a bold adventure dressed in brand-new cowboy attire. He packs his suitcase and walks away from his mundane job, heading to the bustling streets of New York City with aspirations of becoming a male prostitute catering to women. However, his initial attempts at success fall flat. Despite managing to spend the night with a wealthy middle-aged New Yorker, played by Sylvia Miles, Joe surprisingly finds himself giving her money instead.
In the city, Joe encounters the shrewd and streetwise Enrico Salvatore "Ratso" Rizzo (Dustin Hoffman), a limping con artist who tricks Joe out of $20 by promising to introduce him to a well-known pimp. This leads Joe to an uncomfortable meeting with a Bible-thumping figure played by John McGiver, from which he hastily escapes in pursuit of Ratso. As Joe wanders aimlessly through the city, he eventually finds himself locked out of his hotel room, with most of his possessions being held captive.
Desperate for cash, Joe foolishly agrees to engage in a transaction with a young man in a movie theater, only to discover that the kid has no money to pay. In a moment of anger, Joe threatens him for his watch but ultimately lets the young man walk away unharmed. The following day, in a fit of rage, Joe confronts Ratso, who, in turn, suggests they share an apartment in a run-down building where he’s been squatting. Joe, with no better option, reluctantly agrees, and they quickly establish a “business relationship” as hustlers in the gritty reality of New York City.
As their connection deepens, Ratso's health continues to deteriorate due to his long-standing ailments. Flashbacks throughout the movie reveal Joe's troubled upbringing by a neglectful grandmother after being abandoned by his mother, alongside the heartbreak of a past romance with a local girl named Annie. Ratso shares his own grim family history, detailing how his father, a shoeshiner and illiterate Italian immigrant, suffered greatly from the hard life in the subways. Ratso aspires to escape the city and dream of one day moving to Miami.
Their lives take a twist when a unique couple at a diner hands Joe an invitation to a party. The ensuing scene is reminiscent of the Warhol era, complete with cameos from Warhol superstars. After partaking in a joint he thought was a regular cigarette and taking a mysterious pill, Joe begins to hallucinate at the party. He exits with a socialite, Brenda Vaccaro, who offers him $20 for the night, yet when faced with the moment, Joe struggles to perform. However, after engaging in a game of Scribbage, he hilariously proves his limited intellect, and soon a teasing remark about possibly being gay seems to unlock his ability to function.
After what appears to be a successful encounter, Joe returns home to find Ratso bedridden with a fever. Refusing medical assistance due to his lack of funds, Ratso implores Joe to secure bus tickets for their escape to Florida. In a desperate act, Joe resorts to robbing a man at an amusement arcade when he attempts to pay with a religious medallion instead of cash. With the stolen money, Joe manages to buy two bus tickets, but the journey takes a tragic turn as Ratso's health declines further.
As they travel closer to Miami, Joe, feeling hopeful, discards his cowboy attire for something more practical, but their dream of a new life shatters when he realizes Ratso has passed away. The bus driver informs Joe that the only course of action is to continue to Miami, leading to a heart-wrenching conclusion where Joe, alone and terrified, sits with his arm around his deceased friend, embodying the harsh realities and unfulfilled hopes of their lives.
