The story takes place in Gotham City, 1981
Arthur Fleck (Joaquin Phoenix) works as a clown-for-hire for a company called Ha-Ha's. He struggles with severe depression personally but finds some form of optimism in performing for others and trying to make people laugh. He is tasked with advertising a store by dancing and waving a sign around. On one such occasion, the sign gets snatched by a group of punk teens, forcing Arthur to chase them into an alley. They smash the sign against his face and proceed to mercilessly kick him while he's down.
In this era, Gotham is struggling with crime, unemployment, and poverty. Arthur visits a social worker for his medication, as well as his ongoing mental health issues. On the bus ride home, a small child looks at Arthur. He makes silly faces that amuse the boy, but his mother tells Arthur to leave him alone. Arthur begins to laugh hysterically and uncontrollably. When the mother questions him, he hands her a card that explains that he has a mental condition that causes him to laugh the way that he does.
Arthur returns home where he lives with his ailing mother, Penny (Frances Conroy). They sit and watch a talk show with host Murray Franklin (Robert DeNiro). Arthur imagines himself being on the show and getting Murray's attention. In his fantasy, Arthur charms the audience and Murray by telling them that he takes care of his mother. Murray relates to Arthur and invites him upon stage in front of everyone where they share a familial embrace. It is revealed that Penny used to work for Thomas Wayne (Brett Cullen) and is obsessed with the millionaire and has been currently writing to him to try and better their living situation.
At Ha-Ha's, Arthur is given a gun for protection by his co-worker Randall (Glenn Fleschler) after he hears about the mugging incident. Arthur is both reluctant and relieved to receive such a gift as firearms are outlawed at work, but soon finds his confidence building after receiving the weapon. However, soon after this, he is confronted by his cold and unfeeling boss who reprimands him for losing the sign and takes the cost of it out of his pay. Arthur responds only by smiling bitterly.
Arthur is infatuated with his neighbor, single mother Sophie Dumond (Zazie Beetz). She speaks to him politely, about relating issues which he himself can relate to. However, while trying to make an impression with her, he appears awkward and weird around her. At one point, he spends his day following her. Later, she comes by his apartment and asks if he was following her, and he admits that he was, but she doesn't seem put off by it. He invites her to a stand-up comedy show that he is performing at. She is hesitant but is won over by his charm and sense of humor. Arthur watches comedians perform to help him gain some insight into the craft, but feels more awkward and out of place as his over-the-top laughter is not genuine.
Arthur goes to the comedy club for his performance. His nervousness consumes him and as a coping mechanism, unintentionally finds himself laughing so hard that he can barely speak. He then begins going off into his routine, which isn't very funny. Sophie appears to be in the audience... the only person who is laughing at Arthur's jokes. This gives him the comfort he needs to continue to joke despite his inner torment and turmoil.
Arthur later goes to a children's hospital to entertain them as a clown. He brought his gun with him, and it falls out on the floor. Arthur's boss later chews him out for this. Arthur pleads for a second chance but his boss refuses and fires him on the spot. To top things off, Randall throws Arthur under the bus by claiming that Arthur got the gun himself. On the subway train ride home from Ha-Ha's in full clown getup, Arthur spots three drunk young Wall Street types working for Wayne Enterprises harassing a woman. Arthur starts laughing unintentionally and draws the attention of the men, while the woman wisely flees from that car. The men approach Arthur and mock him and his laughter before they start to beat him. Arthur fights back in self defense but they team up and relentless beat him to the floor. Having had enough, Arthur then pulls out his gun and shoots two of them dead in self defense before following the last guy out of the train and murdering him on the stairs.
In shock over what he just did, Arthur retreats into a bathroom. After a moment of frantic contemplation, he finds a force rising within him and he begins to dance by himself. In this moment he sees himself in the dirty mirror as a battered and smeared and yet powerful clown and begins to embrace it. He hides the gun and then returns to the apartment where he meets and kisses Sophie for the first time.
The news of the three murders spreads, with some seeing it as an attack on the wealthy, while others support the act. Thomas Wayne speaks out and condemns it, labeling the lower class as "clowns" which becomes a symbol they readily embrace. The next day, Arthur cleanse out his locker at Ha Ha's but not before confronting Randall about betraying him and breaking the time punching machine. He then leaves, feeling high-spirited and free. News reports show clown rioters protesting through the city and wreaking trouble, condemning the higher privileged. Arthur sees that he has inadvertently caused this and begins to see his true potential which makes him genuinely delighted.
Arthur later finds one of Penny's letters to Thomas, which indicates that Arthur is Thomas's son. Arthur goes to Wayne Manor where he meets young Bruce (Dante Pereira-Olson). After performing a magic trick for Bruce, he sticks his hands through the gate and forces Bruce to smile, realizing deep within that they may or may not be brothers. However, Alfred (Douglas Hodge) comes to intervene and tell Arthur to leave. Arthur mentions his mother and her involvement with Thomas, but Alfred says he remembers Penny and that she was lying to him. Arthur attacks and nearly strangles Alfred but then notices that Bruce is watching. Arthur then gets hold of himself and flees the Wayne premises.
Arthur finds Thomas at a public art theater event and tries to confront him with the potential of him being his father. Arthur mentions Penny, whom Thomas also remembers. He says she was delusional and that there's no way Arthur could be his son. Thomas also explains that Penny never told Arthur that he was adopted, which Arthur strongly rejects before uncontrollably laughing in Thomas's face. Thomas, unaware of Arthur's condition, becomes defensive and punches Arthur in the face before having the man is thrown out of the building. Arthur returns home where he tortures himself with the fridge in a fit of depression and longing.
Two police detectives, Burke (Shea Wigham) and Garrity (Bill Camp), go to Arthur's apartment to question him on the subway murders due to the word that the suspect was wearing clown make-up, and they know Arthur lost his job earlier that day. Arthur denies any involvement and gets the detectives to leave. Not long after, Penny falls ill and is hospitalized. Sophie sits by Arthur as he tends to his mother. In the hospital, Arthur sees that Murray's show is playing a clip from his stand-up routine, but he is hurt to see that Murray only played it to mock Arthur.
Arthur later receives a phone call from a rep for Murray's show. He is invited to appear as a guest, which Arthur reluctantly accepts. After studying other interviews on the comedy show, Arthur decides to commit suicide in front of the live audience, thinking it will make them laugh.
Seeking hard proof, Arthur goes to Arkham Asylum and speaks to a clerk, Carl (Brian Tyree Henry), who has a file on Penny. When Carl says he can't give Arthur the info he wants, Arthur snatches the file and runs away to read it. Once away, Arthur opens the documents and reads them, finding that Thomas was telling the truth- according to the documents. The reality is that Penny adopted Arthur after he was found abandoned, and she abused him, tying him to a radiator and beating him alongside her abusive boyfriend. One part of the file mentions Arthur having a head injury, which is most likely what caused his laughing condition. Arthur returns to the hospital and tells Penny that he thought his life was a tragedy, but he sees it's a "fucking comedy". With that, he smothers Penny to death.
Arthur goes back home and breaks into Sophie's apartment. She sees him and is terrified, asking him to leave for the sake of her daughter. Arthur asks her if she has ever had "a really bad day" to which she replies that she doesn't even know him. Through this, it is revealed that every other moment featuring Sophie was just in Arthur's head. A broken and frustrated Arthur leaves Sophie alone, storming out of the apartment.
Arthur starts to get ready for his appearance on Murray's show and paints his face white. He is visited in his apartment by Randall and another former co-worker, named Gary (Leigh Gill). They offer condolences after they hear about Penny's death, but then Randall begins mentioning Burke and Garrity going to their apartments to question them about the subway murders. Arthur realizes that Randall is only seeking a way to use Arthur in order to cover his own butt and then snaps, brutally stabbing Randall twice in the face before smashing his head against the wall. A terrified Gary questions Arthur's deeds and begs to be let go. Arthur agrees to before playfully scaring him as a prank. Gary tries to undo the lock on Arthur's door but is unable to due to his height. He asks Arthur to open the door for him to which Arthur immediately agrees, pausing once to thank Gary for being the only person in his life who was nice to him. Arthur kisses Gary on the forehead and lets him go.
Arthur then dyes his hair green, puts on full clown make-up, and dons a burgundy suit. He then dances down the stairways, fully embracing his insanity and carefree life. Burke and Garrity find Arthur dancing in the street and move in to arrest him. Arthur runs, and they chase him into the subway train where dozens of other Gotham citizens are dressed like clowns after being inspired by the murders. Arthur hides his face with a clown mask which he steals from a protester and inadvertently starts a brawl in the train cars. As the detectives pursue Arthur, one clown gets in the way, and Burke accidentally shoots him dead when they struggle with his gun. The clowns pull the detectives out of the subway and start beating them relentlessly, allowing Arthur to get away, moving smoothly through the police forces which swarm the area.
At the TV station, Arthur meets Murray and his agent Gene (Marc Maron). Before he goes on, Arthur asks Murray to introduce him as "The Joker", since Murray referred to him as such when playing his clip. Murray asks Arthur if his clown makeup has political agendas behind it to which Arthur replies, "I don't believe in that. I don't believe in anything." While waiting to be introduced, Arthur sees Murray broadcasting a clip of a struggling Arthur trying to tell a joke. This causes Arthur's mind and plans to change and then he dances out into the spotlight.
Arthur goes out as the show begins. He awkwardly tells Murray a joke which he finds funny for its dark humor though nobody else does. After being confronted of this, Arthur continues by admitting to the subway murders. Murray and the audience slowly realize Arthur is serious. Arthur argues that the audience only cares for the victims because Thomas Wayne spoke for them, but anyone else like Arthur would be ignored and walked over. Murray and the audience grow angrier with Arthur, but so does he. Murray scolds Arthur, which escalates into Arthur snapping and telling another joke, grinning giddily. "What do you get when you cross a mentally ill loner with a society that abandons him, and treats him like trash?!" he asks, only for Murray to try shutting him off before calling for the police. An enraged Arthur then screams, "You get what you fucking' deserve!" before blowing Murray's brains out in front of everyone. The audience runs away in terror, and the news of the murder immediately hits the airwaves. Arthur then laughs genuinely for the first time in his life.
Gotham is now overrun by rioting citizens dressed as clowns after hearing about what Arthur did. The Waynes leave a movie theater to find the chaos in the streets. Thomas takes Martha (Carrie Louise Putrello) and Bruce into an alley, but one clown follows them and tells Thomas he is getting what he deserves using the punchline that Arthur used on the Murray Franklin show. With that, he shoots Thomas and Martha dead in front of Bruce. Meanwhile, Arthur has been arrested and is being taken by police. Arthur looks out the window and laughs gleefully as he sees the destruction he has caused. Just then, the clowns in an ambulance run into the car, killing the cops and freeing Arthur who is injured and unconscious. When he awakes, Arthur finds himself surrounded by a mob of cheering mobsters in clown masks. The rioters then cheer Arthur on as he stands on a car and embraces their admiration, now that he has gotten the recognition he has long desired. He dances to their cheering and then pauses, finding that his nose is bleeding profusely. He then spreads the blood across his upper lip and grins before standing before them, elevated like a god.
Some time later, Arthur is locked up in Arkham. He laughs after telling this story and visualizes a young Bruce standing over his parents in the alley. realizing that he has in a way, turned Bruce into himself, Arthur laughs some more, finding this genuinely hilarious. He meets a new social worker (April Grace) and says he wants to tell her a joke, but she wouldn't get it. A few minutes later, Arthur then steps out of the room, leaving a trail of bloody footprints behind before he is chased around by orderlies.