Jerry (Ryan Reynolds) is an upbeat man who works at a bathtub factory, and lives in a modified apartment above a bowling alley with his dog, Bosco, and his cat, Mr. Whiskers. Jerry is a schizophrenic who chooses not to take his medication and enjoys delusions and hallucinations that manifest in the form of his pets talking to him. Bosco often represents his good intentions while Mr. Whiskers represents his more violent nature. One day, his manager compliments his hard work and chooses him to help organize an employee barbecue, and he gladly accepts the opportunity to work with his workplace crush, an English woman named Fiona. The following day he asks her out on a date. She initially agrees, though with reluctance, but then stands him up to go to a karaoke party with two other women who work with her in the accounting department at work, Lisa and Alison. After the party, Fiona's car won't start, leading her to flag down Jerry as he drives by. Fiona offers to take him out for a late dinner to make up for standing him up on the original date, but on the way, Jerry accidentally hits a deer which crashes through his windshield. Jerry's hallucinations show the deer crying out in pain and begging Jerry to kill it so he slits the deer's throat. Fiona, terrified, runs off into the woods. Jerry pursues her and stabs her to death.
Upon returning home, Bosco suggests he has to go to the police and confess, encouraging him in saying that he's a good man and won't be punished. On the other hand, Mr. Whiskers says there is no shame in killing, but insists Jerry needs to dispose of the body and refrain from going to the police or else he will be severely punished and locked away. Jerry collects Fiona's body from the forest, and returns home with it but leaves a bloody shoe and pile of organs. He dismembers Fiona, placing her innards in numerous plastic boxes and her disembodied head inside his fridge. After this traumatic experience, his delusions increase with now having Fiona being able to talk to him. Her tone suggests she forgives him for his actions, but she insists he takes his medication to end his behavior. Jerry takes his pills, and experiences nightmares of his abusive past. When he wakes up during the night, he is groggy, but his hallucinations have ended; his pets no longer speak to him, his apartment is a complete mess with animal waste littering the floor, garbage piling up in bags and up against the walls of his apartment and blood all over his kitchen after cutting up Fiona's body and Fiona's head is cold and rotting. He throws away the pills in terror, and the next morning, his hallucinations resume and his happy life is back to 'normal'. Fiona tries to convince Jerry to kill someone else so that she has someone to talk to, but Jerry insists that he can't.
Jerry asks Lisa on a date. He develops feelings for her and takes her to his abandoned childhood home, where it is revealed his German mother had confessed to her insanity and was about to be taken away by the authorities when he was a child. When they arrived, she tried to slit her throat, but couldn't do it herself and so she begged Jerry to finish the job to end her suffering. The police had found Jerry standing over his dead mother with a piece of broken glass and he is committed instead. Jerry sobs in front of Lisa, who comforts him. They go back to her house and spend the night together. When Jerry returns home the next morning, he still feels pressured into killing someone else by Fiona and Mr. Whiskers, and seems unsure of what to do next.
Lisa finds out Jerry's address through accounting and delivers a gift to his house. When Jerry inadvertently locks himself out, he tries to get back in through the sky light, but Lisa manages to pick the door open using her hairpin. She wanders in and discovers the state of the apartment, as well as the covered head of Fiona, though she doesn't immediately recognize it beneath the coat covering it. Jerry sneaks up on her, upset that she trespassed into his home, but despite pressure from Mr. Whiskers, he refuses to kill her. Lisa sees for the first time the troubled, delusional man Jerry is, and, frightened, tries to run away, running to the bathroom to hide, and then into his bedroom. Jerry comes in, genuinely trying to apologize for scaring Lisa and she, feeling cornered, attempts to put up an act, insisting they can go back to normal and forget what happened in order to make him let her leave, but when she panics and tries to escape hurriedly, Jerry grabs her by the arms to stop her and throws her backwards back onto the bed to break her neck on the headboard. After she dies, Jerry cuts her body apart and places her head in the fridge, next to Fiona's. Other workers from accounting begin to realize Fiona and Lisa have gone missing. When Alison goes to Jerry's house to ask if he knows where they are, Jerry immediately kills and dismembers her.
Jerry confesses his killings to his counselor Dr. Warren. She tries to call the police, but he takes her hostage into the countryside and forces her to help him. She calms him down and shows understanding, which makes him feel better. Meanwhile, the other workers from accounting break into Jerry's home (as Bosco runs away) and discover the apartment's state as well as all the blood, and immediately retreat to call the police. Shortly after Jerry returns home, still holding Warren hostage, the police surround his house and prepare to move in. Jerry takes Mr. Whiskers into the bathroom and then flees down into the basement, breaking a gas pipe while doing so. After rescuing Dr. Warren, the police are knocked back from a huge explosion that was caused by the gas leak.