In Los Angeles, California, aspiring novelist Larry Donner (Billy Crystal) suffers from writer's block as he attempts to begin a new book. He turns on the television and sees his ex-wife, Margaret (Kate Mulgrew), discussing her best-selling novel, Hot Fire, on a daytime talk show with Oprah Winfrey. Larry yells at the television, accusing Margaret of stealing his book.
Meanwhile, the middle-aged, downtrodden Owen Lift (Danny DeVito) tends to his verbally abusive "Momma" (Anne Ramsey) When she demands a soda, Owen decides to poison her by pouring lye into the drink. However, just as she is about to take a sip, he has second thoughts and bats the cup out of her hand.
Owen attends a community college writing class, taught by Larry Donner. After class, Owen follows Larry to a laundromat and demands to know what the teacher thought of his story, "Murder at My Friend Harry's." Larry tells Owen that his characters lacked motivation and drives away.
At home, Larry calls a woman named Beth (Kim Griest) and leaves her a message, apologizing for missing their date. He returns to the blank page in his typewriter. Still uninspired, he types several variations on the opening line, "The night was hot," but gets no further. The next day, he finds Beth, an anthropology teacher at the community college, on campus. He apologizes again for missing their date, and she agrees to give him another chance. Several of Larry's students, including Owen, eavesdrop as Larry complains about his writer's block and his lack of passion. Beth argues that he is passionate about one thing: his ex-wife, Margaret. As Beth walks away, Larry shouts that he hates Margaret and wishes she were dead.
Owen hounds Larry for a meeting to discuss his story. When they finally get together late one night, Larry explains that a good murder mystery must eliminate the killer's motive and establish a plausible alibi. He tells Owen to go see an Alfred Hitchcock film for inspiration. Later, Owen watches Hitchcock's 1951 film 'Strangers on a Train', in which the two leading characters agree to "swap murders," eliminating each other's motives. Having overheard Larry's tirade against his ex-wife, Owen assumes his teacher wants to swap murders with him.
Owen travels to Hawaii, where Margaret Donner lives. Meanwhile, Larry's agent Joel (Rob Reiner), who recently signed Margaret as a new client, drops Larry. After going to a local jazz club to watch his friend and next door neighbor Lester (Branford Marsailes) practice his saxophone for a performance that evening, Larry then goes to a beach to drown his sorrows where he gets drunk and stays there the rest of the day and all night.
Meanwhile, in Hawaii, Owen attempts to murder Margaret Donner at her house, but has to hide when the groundskeeper walks in and begins to have sex with her. Owen sneaks out of the house without being seen and later follows Margaret from the house and onto a ferryboat. As Margaret leans out over the railing to retrieve one of her earrings that fall off, Owen creeps up behind her....
The next morning, Larry, now back at his apartment, is awakened by a phone call from Owen, who announces that he fulfilled his side of the bargain by murdering Margaret. Dumbfounded, Larry insists there was no bargain. He hangs up and runs to his neighbor Lester's apartment, who is in bed with a random woman that he picked up from the nightclub. When Larry asks Lester about his whereabouts for the previous day, Larry quickly realizes that having spent most of the previous day and all night at the beach getting drunk and with no one to verify his whereabouts, he has no alibi. Larry then begins rambles incoherently about needing an alibi, and asks to borrow Lester's car. Driving to Beth's house, Larry hears a radio news report confirming Margaret's disappearance and continues to panic and rightfully thinks that the police will suspect him since he has no alibi for the previous afternoon and night. He explains the ordeal to Beth, who is disturbed by the news, and sends him away.
That night, when Owen returns from Hawaii, Larry picks him up at a bus station and demands that he confess to the murder, but Owen refuses. He attempts to scare Owen into submission by speeding, but loses control of the car and runs off the road. They retreat to Owen's house for Larry to hide out from the police, where Larry meets the cold-hearted "Momma," the next morning and begins to understand Owen's alienation.
Owen begs Larry to suffocate Momma with a pillow and leaves the house to go bowling that evening so he can have an alibi for himself. In Owen's absence, Larry searches for evidence he can use to incriminate Owen. However, he discovers that Owen purchased an airline ticket to Hawaii under Larry's name. Larry is about to leave the house when Detective DeBenedetto (Bruce Kirby) and another police officer arrive to question Owen about Larry's whereabouts, who returns home just in time to invite them inside. Owen is disappointed to find Momma still alive and Larry hiding in the pantry. He toys with the idea of turning Larry over to the cops, but does not go through with it and sends the police on their way.
Later, Owen reprimands Larry for his inaction. Owen sets up a trap for his mother to fall down a flight of stairs while he goes out bowling again the following night, but Larry falls down the stairs instead. Hours later, he regains consciousness and finds Owen trying to kill Momma by blasting a loud horn in her ear, but Momma awakens.
The next morning Momma sees a television news report identifying Larry as the prime suspect in Margaret's disappearance. She threatens to call police and Larry flees. He boards a train to Mexico. Owen and Momma follow, and the three ride in a train car together. Larry tells Owen he has resolved himself to this turn of events. He believes he has a great ending to a new story, based on his and Owen's ordeal, but he wonders how to begin, and asks which opening line is better: "The night was humid," or "The night was moist." Momma states matter-of-fact that the line should be, "The night was sultry." Finally driven to kill her, Larry chases Momma through the train. When she reaches the caboose, she loses her balance and falls out. Larry tries to rescue her. Having had a change of heart, Owen arrives and helps Larry pull Momma to safety. Momma praises Owen but kicks Larry off the train.
Larry recuperates from the fall in a hospital with a broken leg, where he turns on the television and sees Margaret alive and well and being interviewed. She tells a news reporter that she fell overboard when reaching for her diamond earring, and was rescued by a Polynesian fisherman she now plans to marry. She has already sold film rights to her story for $1.5 million. That night, Larry has nightmares about killing Margaret. He wakes up inspired and begins to write.
One year later, Owen reunites with Larry at his apartment, claiming that Momma died a few months ago and he is now free from her. Larry has just finished the manuscript for his new novel, 'Throw Momma from the Train', based on his experiences with Owen and Momma. Owen informs Larry that he recently sold a book about the same thing, titled, 'Momma and Owen and Owen's Friend Larry'. Believing that his book idea has once again been stolen by another writer, Larry strangles Owen. However, he stops short when Owen produces a copy of the book, which is a children's book with pop-up illustrations. The final chapter shows Larry, Owen, and Beth taking a trip to Hawaii together.
Sometime later, Larry's book has been published. Beth praises it as she, Larry, and Owen relax on a tropical beach.