In New York City, Lauren Ames (Shelley Long) and Sandy Brozinsky (Bette Midler) take an immediate dislike to each other when they meet for the first time while auditioning for an acting class under the great Russian acting teacher Stanislav Korzenowski (Robert Prosky). Sandy, whose last film was a low-budget grade-B movie titled 'Ninja Vixens', is brash and crass and decides to audition on a whim, while the prim and proper, Yale-educated Lauren has practiced for hours on Ophelia's monologue from Hamlet. Both women are accepted, but Sandy gets in on a scholarship, while Lauren must borrow $5,000 from her well-to-do parents, even though she already owes them $32,000.
While working her day job at a costume shop, Lauren meets grammar school teacher Michael Santers (Peter Coyote) who is looking for a pumpkin costume for one of his students. When the shop does not have the costume, Lauren offers to make it for him. Michael accompanies Lauren home and the two have sex. They begin dating, but unknown to Lauren, Michael is also sleeping with Sandy.
When Michael picks up Lauren after class, he realizes it is their three-week anniversary and has the taxi stop at a florist shop. Immediately after he enters the shop, a bomb explodes and the building is engulfed in flames. A terrorist group claims responsibility. Presuming Michael dead, Lauren goes to the morgue wanting to see his body, but a moment later, Sandy also arrives. The two women scuffle upon realizing they were sleeping with the same man. When they look at the body, the face is burned beyond recognition, but they realize it cannot be Michael because the penis is far too small.
Lauren and Sandy report this to police, who laugh them out of the office. They go to Lauren's apartment hoping Michael will be there, but find Russian mobsters searching for evidence that Michael is still alive. Eluding the gangsters, they go to a tobacco shop and learn Michael was in there just a few hours earlier. Following a lead, they pretend to be policewomen and go to drug dealers on the Lower East Side, who report Michael purchased a fake passport under the name "John Strauss."
At the airport, Lauren impersonates a Russian wife searching for her runaway husband where the ladies learn from the ticket clerk that their wayward lover is on a flight to Albuquerque, New Mexico, and purchase tickets to go there. Meanwhile, Central Intelligence Agency (CIA) agent Joe Atkins (John Schuck) and his men have been following the pair, hoping they will lead them to Michael. They try to stop them before they can board the airplane, but the women create a diversion using stolen cash they found which Michael left behind and get on the plane safely.
Sandy and Lauren land in Albuquerque at the same time that Atkins and his men arrive in a private plane. They elude the CIA and spot Michael getting off his flight. The women steal a motorcycle and follow Michael to a lakefront shack. However, the CIA arrives a moment later and shoot Michael. Sandy and Lauren knock Atkins unconscious and rescue Michael, then demand answers. Reporting that both women were "convenient" and "forgettable," Michael tries to kill them with a knife, but they run away. Michael chases them across the lakefront and they flag down a passing helicopter. It lands revealing that Atkins is on board along with a man named Weldon (Anthony Heald), who was in their acting class.
Weldon, an intelligence agent himself, explains that Michael was at agent in the CIA, but became a double agent, working with Stanislav Korzenowski, who is an agent for the Russian KGB. Weldon was in the acting class trying to catch Michael making contact with Stanislav. Michael stole the prototype of "Florotoxin," an experimental airborne virus which can kill vegetation for hundreds of miles. Weldon explains that just a few drops carried by the wind could destroy the nation's agricultural Wheat Belt.
A little later, Michael radios Atkins demanding $20 million for the test tube of Florotoxin. A van picks up Atkins, Weldon, Lauren, and Sandy, unaware that Stanislav and his KGB men are at the wheel. Stanislav uses knockout gas to render Atkins and Weldon unconscious, but Lauren and Sandy escape out the back of the van. When Stanislav shoots his gun in Lauren's direction, she falls and pretends to be hit. As the KGB agent comes to check on her, Lauren grabs his weapon and holds him at gunpoint, demanding answers. Stanislav explains that Michael targeted both women because they were in his class. He and Michael communicated through the ladies' class notebooks which Stanislav periodically checked. The women tie up both the CIA and the KGB operatives and leave them in the desert while they hitch a ride on a passing big-rig truck going to Tres Crucas, New Mexico, where they meet a guide named Frank (George Carlin), who takes them to a brothel.
There, Lauren and Sandy dress up as men to gain entry to the establishment they find Michael asleep having having a sexual encounter with another prostitute. The ladies steal the test tube of Florotoxin. Michael gives chase, but they escape by catching a ride on a truck filled with migrant workers. Later, as they ride for help on horseback, Michael captures Lauren and takes her away. Sandy begs Frank to help her rescue Lauren, explaining that she has become one of her closest friends.
Joe Atkins arranges to exchange the $20 million for the test tube at Mesa Azul cliffs. Atkins uses a rope to lower the briefcase of money from a helicopter, but Michael grabs the briefcase, then fires at the helicopter without giving them the Florotoxin. Sandy and Frank arrive with several friends, who shoot Michael with an arrow. Michael drops the test tube, but Lauren catches it and runs away with the Florotoxin and the briefcase full of money. As Lauren and Sandy are reunited, they are pursued up a cliff by Michael. When Sandy helps Lauren, she drops the briefcase, which opens. The money inside is scattered by the wind. As Michael chases Lauren, who still has the test tube, she uses her ballet training to leap from cliff to cliff. Michael is close behind her, but cannot perform the same leaps and falls to his death.
Back in New York, Lauren and Sandy star in a production of Hamlet, with Lauren playing the Danish king and Sandy playing Ophelia.