Plot

A former radio DJ, suicidally despondent because of a terrible mistake he made, finds redemption in helping a deranged homeless man who was an unwitting victim of that mistake.

Jack Lucas was once a famous, arrogant and egotistical New York City call-in radio talk show host. Largely self-inflicted due to remorse and grief, Jack goes on a quick downward spiral, both personally and professionally, after a glib comment he makes to one of his regular callers results in that caller going on a murder spree. Three years later, the only emotional and financial support a despondent Jack receives is from his current video store owning girlfriend, Anne. When Jack hits rock bottom, he meets a seemingly crazy and homeless man calling himself Parry. Parry does have mental health issues, namely hallucinations centered around the story of the Fisher King, which is why he has an obsession with obtaining the Holy Grail. When Jack learns of Parry's own background and the reason he got to where he is, Jack feels he needs to be part of Parry's salvation. He figures the way to do so is to connect Parry with Lydia Sinclair, a shy and uncoordinated woman who Parry loves from afar. In doing so, Jack may himself be able to recapture his old life back. But if he does, he may not realize that he was no saint in that former life.—Huggo

A former radio shock-jock (Bridges) sinks into a boozy depression when his flip comment on the air is blamed for a shooting spree in an upscale cafe. Living off the kindness of long-suffering girlfriend Anne (Ruehl, who won an Oscar for Best Supporting Actress), Jack has an epiphany when he is rescued from street punks by Parry (Williams), a homeless former professor who has created a world of his own invention to insulate himself from the pain of witnessing his wife's death in the cafe shooting spree.

Jack Lucas (Jeff Bridges), a narcissistic, misanthropic shock jock, becomes suicidal and sad when he learns that some of his insensitive on-air comments inadvertently prompted a mentally unstable regular caller, Edwin (Christian Clemenson), to commit a mass murder-suicide at a Manhattan restaurant.

Edwin had called Jack during his live radio show and told Jack that he liked a girl that he met at a bar. Jack had made fun of Edwin reminding him of the time when he proposed to a checkout girl at a supermarket, and her reaction was one of horror. Jack insisted that Edwin had no chance of dating this girl. Jack says that the upmarket girls only date their own kind, calls them evil and says that they are repulsed by imperfection and horrified by the banal. Jack says that people like them should be stopped as they stand against everything that America stands for. Edwin agrees with Jack, and this drives him to the murder suicide.

Edwin arrived at the upscale Manhattan restaurant at 7:15 PM, the peak rush hour. The restaurant hosted the city's best and brightest. Edwin opened fire with a shotgun and killed 7 people, before pulling the trigger on himself. Jack was on course to make his TV debut, but due to the negative publicity, his radio show is canceled, and his career comes to an abrupt end.

Three years later, Jack is working for his girlfriend, Anne (Mercedes Ruehl), in her video store, and is in a mostly drunken, depressed state, fearful of being recognized. Jack hates interacting with people.

One night, while on a bender, he is moments from suicide. Jack wears concrete blocks on his feet and is ready to jump into the East River. However, he is attacked and nearly set on fire by teenage punks who mistake him for a homeless person. He is rescued by Henry "Parry" Sagan (Robin Williams), a delusional homeless man who claims that his mission is to find the Holy Grail. Parry is supported by other homeless men who overwhelm the punks and force them to retreat.

Parry takes Jack to the usual gathering place of all the homeless of Manhattan. Then Parry takes Jack to his makeshift shack (which is in the boiler room of a building), which Parry calls home. Parry reveals that he is a knight on a special quest. Jack is terrified as he believes that Parry is crazy.

Parry tries to enlist Jack's help in getting the Grail, explaining that God charged the Fisher King with finding the Holy Grail, but the King incurred an incapacitating wound for his sin of pride. "A Fool asks the King why he suffers, and when the King says he is thirsty, the Fool gives him a cup of water to drink. The King realizes the cup is the Grail and asks, 'How did you find what my brightest and bravest could not?' The Fool said 'I don't know. I only knew that you were thirsty.'"

Parry says that the messengers of God visited him just after he had a really satisfactory bowel movement and told him that he had been chosen to get something that God had lost. They told him to look at the February 1988 issue of Progressive Architecture magazine, page 33. The page had a photo of a trophy that Parry claimed was the Grail (in the office of a Billionaire on 5th Avenue). Parry claims that a Red Knight is always hunting for him, and hence he cannot get close to the Grail, which is why God sent help in the form of Jack.

Jack is initially reluctant but acquiesces after learning that he is partially responsible for Parry's current condition. Parry, whose real name is Henry Sagan, had been a teacher at Hunter College. After witnessing his wife's gruesome death at the same mass shooting that Jack had provoked, Henry had a psychotic break and became catatonic.

When he awakened, he took on the persona of Parry and became obsessed with the legend of the Fisher King. With Parry as his shielding persona, mentions of reality panic him, and he is continually haunted by a terrifying, hallucinatory Red Knight, from a distorted memory of his wife's head exploding from a shotgun blast. After a year in a mental asylum, he was sent to his apartment (where he lived before the shooting). The building supervisor felt bad for him and gave him space in the basement when his lease expired.

Jack seeks to redeem himself by helping Parry find love again. Lydia (Amanda Plummer), a shy woman with whom Parry is smitten, is prodded to meet Parry to join Jack and Anne for dinner. Afterward, Parry walks Lydia home and declares his love for her. She reciprocates, but the brush with reality summons the Red Knight. Fleeing his vision and the memory of his wife's murder, he is ambushed by the same punks against whom he had defended Jack. Beaten and knifed mercilessly, Parry becomes catatonic again. Jack, feeling whole again after "saving" Parry, breaks up with Anne and begins to rebuild his career. However, he has a crisis of conscience during a sitcom pitch after snubbing a vagrant who had previously done a favor for him.

After finding out what happened to Parry, Jack dons Parry's clothing and infiltrates the Upper East Side castle of a famous architect and retrieves the "Grail", a trophy that Parry believes to be the real Grail. During the theft, Jack finds the architect unconscious from attempting suicide. He triggers the alarm while leaving, alerting authorities and saving the man's life.

When he brings the "Grail" to Parry, Parry regains consciousness and tells a silent Jack that he is ready to miss his wife. Lydia visits Parry in the hospital; she finds him awake and leading the patients of the ward in a rendition of the song, "How About You?", with Jack. Parry and Lydia embrace, and Jack reconciles with Anne, telling her that he loves her. She slaps him but grabs and kisses him. That night, Jack and Parry lie naked in Central Park gazing at the clouds, as they view a fireworks display over New York.