Andy Kaufman is a struggling performer whose act fails in nightclubs because, while the audience wants comedy, he sings children’s songs and refuses to tell conventional jokes. As the audience begins to believe that Kaufman may have no real talent, his previously timid “foreign man” character puts on a rhinestone jacket and does a dead-on Elvis impersonation. The audience bursts into applause, realizing Kaufman had tricked them.
Kaufman catches the eye of talent agent George Shapiro, who signs him as a client and immediately lands him a network TV series, Taxi, much to Kaufman’s dismay, since he dislikes sitcoms. Because of the money, visibility, and a promise that he can do his own television special, Kaufman accepts the role, turning his foreign man into a mechanic named Latka Gravas. Secretly he hates doing the show and expresses a desire to quit.
Invited to catch a different act at a nightclub, Shapiro witnesses a performance by a rude, loud-mouthed lounge singer, Tony Clifton, whom Kaufman wants to guest-star on Taxi. Clifton’s bad attitude is matched by his horrible appearance and demeanor. But backstage, when he meets Shapiro in person, Clifton takes off his sunglasses and reveals that he is actually Kaufman. Clifton is a “villain character” created by Kaufman and his creative partner, Bob Zmuda. Once again, the gag is on the audience.
Kaufman’s profile increases with appearances on Saturday Night Live, but he has problems with his newfound fame. When performing live, audiences dislike his strange anti-humor and demand that he perform as Latka. At one show, he deliberately antagonizes attendees by reading The Great Gatsby aloud from start to finish. Kaufman shows up on the Taxi set as Clifton and proceeds to cause chaos until he is removed from the set. He relates to Shapiro that he never knows exactly how to entertain an audience “short of faking my own death or setting the theater on fire.”
Kaufman decides to become a professional wrestler — but to emphasize the “villain” angle, he will wrestle only women (hired actresses) and then berate them after winning, declaring himself “Inter-Gender Wrestling Champion.” He becomes smitten with one woman he wrestles, Lynne Margulies, and they begin a romantic relationship. Problems arise when, during an appearance on ABC’s live TV comedy show Fridays, Kaufman refuses to speak his lines.
Kaufman feuds publicly with Jerry Lawler, a male professional wrestler, who challenges him to a “real wrestling match”, which Kaufman accepts. Lawler easily overpowers and appears to seriously injure Kaufman. Lawler and an injured Kaufman (wearing a neck brace) appear on NBC’s Late Night with David Letterman, ostensibly to call a truce, but Lawler insults Kaufman, who spews a vicious tirade of epithets and throws coffee at the wrestler. It is later revealed that Kaufman and Lawler were in fact good friends and staged the entire feud, but Kaufman pays a price when he is banned from SNL by a vote of audience members, weary of his wrestling antics. Shapiro advises Kaufman and Lawler not to work together again, and later calls Kaufman to inform him that Taxi has been canceled.
After a show at a comedy club, Kaufman calls together Lynne, Zmuda, and Shapiro to disclose that he has been diagnosed with a rare form of lung cancer and may die soon. They aren’t sure whether to believe this, thinking it could be yet another stunt, with Zmuda actually believing a fake death would be a fantastic prank. With little time to live, Kaufman gets a booking at Carnegie Hall, his dream venue. The performance is a memorable success, culminating with Kaufman inviting the entire audience out for milk and cookies. His health deteriorates. Desperate, Kaufman heads to the Philippines to seek a medical miracle through psychic surgery only to find it a hoax, laughing at the irony. He dies soon after. At Kaufman’s funeral, friends and loved ones sing along to “This Friendly World” with a video of Kaufman. One year later, in 1985, Clifton appears at Kaufman’s tribute at The Comedy Store’s main stage, performing “I Will Survive”. Zmuda watches in the audience.