On the first day of Wordfest, a Pittsburgh university's annual February literary event, the crises in professor Grady Tripp’s life are making it difficult for him to concentrate on his creative writing class. His wife Emily has just left him, his once promising career has languished in the seven years since his first novel was published and he is having an affair with married university chancellor Sara Gaskell. After most of the students in Grady’s advanced writers' workshop offer inane criticism of a story written by classmate James Leer, Grady drives to the airport to pick up his agent, Terry Crabtree, hoping Terry will not discover that Grady’s long overdue novel is still unfinished. Terry has just met Miss Antonia Sloviak, assumed to be a transvestite by everyone but Terry, and takes her along to the Wordfest reception at Sara’s house. Sara’s pedantic husband Walter is too self-absorbed to be aware of Sara’s affair, and while Walter expounds on his favorite topic, the cultural implications of the marriage of Joe DiMaggio and Marilyn Monroe, Sara takes Grady into her bedroom. There she tells him she is pregnant, but realizes that complications in their lives make their future uncertain. Later, when Grady goes outside, he is startled to see the mysterious James standing in the snow, holding a pistol. James says that the pistol only shoots caps and explains that he is waiting there for Hannah Green, a sweet-natured student who rents a room in Grady’s house. After James says that he and Hannah enjoy watching old movies together, Grady invites him into the house to see something. He takes James into Sara and Walter’s bedroom and opens a locked closet that contains the prize of Walter’s memorabilia collection, Monroe’s fur-collared wedding jacket. When James starts to cry, saying the jacket looks lonely, Grady suggests they go, but as Grady leaves the bedroom, Poe, Walter’s suspicious dog, starts to growl and lunges at Grady’s ankle. James shoots the dog dead, shocking Grady, who grabs Poe’s body and places it into the trunk of his beat-up car. Before going to the Wordfest keynote address, Grady finds a bottle of codeine in Terry’s suitcase, takes a drink and offers some to James. In the auditorium, successful author Quentin Morewood, known to his friends as “Q,” is giving the address, but is interrupted by periodic outbursts of laughter from James. Feeling weak, Grady leaves the auditorium and passes out in the foyer. Sara is kneeling over him when he awakens, worried about the panic attacks he has been having. She tells Grady that she has decided not to have the baby, but whispers "I love you," then leaves. When Q’s address is over, Grady drives Antonia home while Terry and Q take James to a local bar called the Hi-Hat. On the way to her house, Antonia tells Grady that Terry’s job is in jeopardy and he is depending upon Grady’s new book to put his career back on track. At the Hi-Hat, Grady joins Terry, Q, Hannah and a passed out James. After the bar closes, Terry, Q and Grady pile into his car, while Hannah drives James to Grady's house because no one knows where James lives. As they start to leave, a man whom they earlier had jokingly named “Vernon Hardapple” approaches and says that Grady's 1965 maroon Ford Galaxy 500 is his car. Grady dismisses Vernon's strange behavior, then returns to the auditorium to pick up James’s forgotten backpack, which he discovers contains a completed manuscript entitled The Love Parade . Later, at his house, Grady sees Monroe’s jacket in the backpack. The next morning, after Grady lights his first marijuana cigarette of the day and starts page 2,611 of his novel, James awakens, and Grady tells him about shooting the dog and stealing the jacket. A young policeman comes to the door to say Walter has reported the jacket, as well as his dog, missing, and James is suspected. Grady does not reveal that James is there, and later drives with him to Sara’s house. Although he tells her that he wants to be with her, she says that she still has not made a decision. Grady then takes James with him on the long drive to Emily’s parents’ house, and while Grady smokes more marijuana, James tells him increasingly more complicated stories about his life. Emily is not at her parents’ house, but her physician father wraps Grady’s injured ankle and tries to tell him that Emily left because Grady “wasn’t there.” On the trip back to Pittsburgh, Grady tells James he is a terrific writer then, when they stop at a highway restaurant, learns from directory assistance that “Carvel,” the town which James claimed is his home, does not exist. Now realizing that James has made up everything, Grady searches his backpack and finds James’s home phone number. Some time later, James’s wealthy parents arrive. James reluctantly leaves with his cold parents, but again forgets his backpack. Grady spends much of the evening sitting in his car, smoking marijuana and reading James’s novel. He arrives home while Terry is throwing a party and finds Hannah in her room, reading Grady's voluminous manuscript. Grady later tells Terry how good James’s book is and Terry suggests that they “rescue” him. In the middle of the night they go to the Leer estate and find James in a large guesthouse. He is happy to leave with them but to make sure that his absence is not detected, Grady places Poe’s body, which was still in his trunk, in James’s bed. Back at Grady’s house, as he places a call to Sara, he spots a van marked “Kraynik’s Sporting Goods” slowly drive by. When Walter answers the phone, Grady confesses that he is in love with Sara. The next morning, Sara comes to see Grady and says that James's parents found Poe’s body in their son’s bed. Just as Grady confesses that James is upstairs, the police come to arrest him. James, who is in bed with Terry, cheerfully goes to jail, happily relating that Terry plans to publish his book and that Grady is the best teacher he ever had. Now Grady discovers that his car has been stolen, and goes to Hannah’s room to borrow hers. She tells him that his novel is beautiful, but its length makes it obvious that he does not practice what he teaches, to make choices. Annoyed by her criticism of his “being under the influence” while writing, Grady grabs his manuscript and takes Terry with him to retrieve his car. On the way, Grady tells Terry that the Ford, which was given to him by a friend who owes him money, was probably stolen from Vernon. They then drive to Kraynik’s Sporting Goods store and find the missing car. Grady grabs his bag of marijuana and James’s gun from the glove compartment but does not find Monroe’s jacket. He briefly passes out in another panic attack and awakens to find Oola, a pregnant waitress from the Hi-Hat, smiling at him and wearing Monroe's jacket. Then Vernon arrives and sees the gun. Fearing for Oola, who is his girlfriend, he starts to create a scene, prompting Terry to race across the street in Hannah’s malfunctioning car. The car door opens, causing Grady’s manuscript pages to fly into the wind as the car crashes into a wall. Vernon then drives Terry and the disconsolate Grady back to the university. Terry proffers that losing the manuscript may have been a blessing in disguise as Grady tries unsuccessfully to explain to Oola what his novel was about. Back on campus, Grady decides to let Oola keep the jacket and realizes that what he wants to do is help his students figure out "where they want to go." Inside the auditorium, Walter is announcing the “plums,” publishing contracts given to local authors during Wordfest. James's book is announced as being published by Terry’s company, which is also publishing Walter’s book on Monroe and DiMaggio, The Last American Marriage . Grady leaves the auditorium and decides to give his remaining bag of marijuana to the janitor and begins to feel faint. Months later, in his study at Sara’s house, Grady completes work on his book, writing that James was not expelled, but quit and moved to New York. Hannah is now a junior editor and although Grady lost his wife, his book and his job, he finally learned where he wanted to go. As Sara and their baby drive up, Grady looks lovingly at them, happy that he now has someone to help him get where he is going.