Los Angeles, 1968. Jeff Gerber (Godfrey Cambridge) lives in an average suburban neighborhood in the San Fernando Valley with his seemingly liberal housewife Althea (Estelle Parsons), who tolerates her husband's character flaws out of love, and two children, 10-year-old Burton (Scott Garrett) and eight-year-old Janice (Erin Moran). Every morning when Jeff wakes up, he spends some time under a sun lamp, bats around a boxing ball, drinks a health drink, and races the bus to work on foot.
Jeff works as an insurance agent in downtown L.A. where he presents himself to his co-workers and other people as happy-go-lucky and quite a joker, but others tend to see him as obnoxious and boorish. Althea, who watches the 1968 race riots every night on TV with great interest, chastises Jeff for not having sympathy for the problems of black Americans.
One morning, Jeff wakes up to find that his pigment has inexplicably changed; he is a black person. He tries to fall back asleep, thinking that it is a dream, but to no avail. He tries taking a shower to wash the "black" off him, but finds it doesn't work, when Althea walks into the bathroom, and screams. He explains to her that the "Negro in the bathroom" is him.
At first, Jeff believes this to be the result of spending too much time under the sun lamp. He spends almost the entire day at home, afraid to go out of the house, only going out once to venture into the "colored part of town" in order to find a pharmacy to buy "the stuff they use in order to make themselves look white." His attempts to change his skin color fail from using skin creme, to industrialized soap, to even a "milk bath".
The next day, he is persuaded to get up and go to work. As he normally does, he races down the street with joy to catch his bus but when he, a "black man", is spotted he is harassed by several racist white people who call the police thinking that Jeff is running because he has just committed a crime. When the police question him all of the white people surround him as the police check his briefcase. When they find a pair of shoes inside they accuse him of stealing them and he tries to explain that they are his work shoes he changes into when he arrives at work. The crowd is now loudly shouting and the police make him try the shoes on.... when they fit they are still unsure until the bus driver, whom is black, comes to his defense explaining that he is a regular passenger who was simply running to catch it. With that, the police leave without arresting Jeff who thanks the bus driver for helping him out of this jam. The bus driver tells Jeff that he never realized that he was black before. Some witty banter ensues as they board the bus.
He gets off of the bus near his office building and walks into the diner he stops at every morning for his health drink and he is met with the same shock and confusion by the black man who serves him his drink every day. The server also says he never realized he was black before and more witty banter about his color ensues.
Upon arrival at work, his co-workers all react with shock at his new "black" appearance and are at a loss of words to ask Jeff what has happened to him. His boss wants to see him immediately and he walks into his office and sits down in front of him. His boss doesn't seem to "get" that Jeff has turned black but asks him if he is spending too much time under his sun lamp as his tan is very dark. Jeff makes a witty comment back and his boss is so occupied with Jeff's decreased sales that he passes right over the fact that Jeff is now black and continues to question him about how he can bring his sales up and warns him he must. Jeff agrees and walks back into his own office where he sits at his desk and begins to make sales calls.
The previous day, Jeff had set up a lunch appointment with a wealthy client at an upscale restaurant. When he arrives at the restaurant he is rudely greeted by the door man who will not let him in due to his race. Jeff explains he has a meeting with his client to no avail. By this time all of the black people witnessing this begin to rally around Jeff and cause a scene. The manager comes outside and again Jeff politely tries to explain he is meeting someone for a business lunch and asks the manager to get the man inside to clear it all up but the manager refuses and the police are called. They bring Jeff back to his office and ask his boss if he is in fact his employee and when his boss confirms that he is, the police leave him there again without making an arrest. His boss is still not fully understanding about Jeff's condition but sees that somehow this can help drum up business.
After work, Jeff goes his local physician and makes an appointment who is equally shocked and cannot explain Jeff's "condition" either but agrees to look into it.
The next day, Jeff is forced to sit at the bus stop instead of running to catch the bus to avoid any more hassles with white people. Jeff is forced to sit in the back of the bus by the current segregation laws to leave the front seats only for white people. At lunch, Jeff is now forced to go across town to eat at a diner which is a "blacks only" eating place. After a second visit to his doctor for his "skin condition" reveals nothing of the ordinary about his skin, his racist doctor shows his own "true colors" when he suggests that Jeff might be more comfortable with a black doctor and refuses to consul with him anymore.
Returning home that afternoon, he finds the front door locked (which it usually isn't) as well as the curtains and shades drawn, and Althea afraid to leave the house, look out the windows, or answer the ringing phone. He doesn't understand why until he receives an anonymous phone call from an unseen man who says: "move out, nigger!" Jeff is forced to take the phone off the hook for the night since it keeps ringing every few minutes with more anonymous phone calls from racist people telling him to move out. Also, unseen people throw eggs and splatter black paint at his front door and windows.
At work the next day, a secretary (who had previously ignored him) makes several advances toward him, finding him more attractive as a black man. Jeff's boss suggests that they could drum up extra business with a "Negro" salesman which he persuades Jeff to travel to African-American neighborhoods across the city to pitch more of his sales over the next few days as Jeff becomes more observant to other black people and how they live.
After returning home from work one evening, he finds four men in his home who had apparently made the threatening phone calls to his house (despite their unconvincing denials), who offer him $50,000 to move out of the neighborhood despite the fact they have known him for several years. The racist neighbors tell Jeff right to his face that they don't want a "nigger" living on the same street at they do. Jeff manages to raise the price to $100,000 by using some veiled threats about moving "his people" into the neighborhood. After the men leave, Althea, somewhat angered that Jeff used his new race to blackmail his neighbors into bribing him to move out of the neighborhood, sends their two children away to live with a relative. Burton and Janice tell Jeff they they are both awkward and uncomfortable with their father being black. On top of all that, they are now being bullied at their school by their classmates over their father's new racial affiliation.
Although she still loves Jeff, Althea's sanity begins to break from the stress of the whole thing of Jeff now being black and of the neighbors continuing to make harassing phone calls and leaving threatening letters. As a result, she leaves him to rejoin her kids and move far away, thus leaving Jeff alone and without a home to live in.
Finally accepting the fact that he is black (and always will be for the rest of his life), Jeff goes to work the next day where he tells off his boss by saying that he quits and vows to open his own insurance business. Jeff moves out of the all-white suburban neighborhood and into a small apartment in a black neighborhood in the downtown part of the city. Jeff then starts his own insurance company which soon becomes successful due to his education and expertise. Jeff also starts a tryst with his former secretary whom continues to be turned on by his new negro appearance. However Jeff still manages to communicate with his wife while he embraces his new race by going out evenings to "blacks only" nightclubs, restaurants, bars, and other places.
The very last scene shows Jeff practicing martial arts with a group of black menial workers, apparently having become one of the militants he used to put down.