Jack fakes his death and flees the country. Roberto was accused of killing the President and is killed by the people of Parador. Madonna stays behind and becomes the new President of Parador.
Jack Noah (Richard Dreyfuss) is an American actor who has just completed filming a movie in the South American island nation of Parador, which is led by the dictator President Alfonse Simms (Lorin Dreyfuss, Richard's real-life brother). When Simms suddenly dies, the head of the secret police Roberto Strausmann (Raul Julia) has Jack brought to the presidential palace and offers him the role of a lifetime: play the part of the president until a peaceful transition can be made, or he will be killed if he refuses. Jack accepts the role and becomes President Simms. All of his handlers quickly figure out the president is an impostor, but they keep their mouths shut so they don't get killed by the secret police.
Simms' mistress Madonna Mendez (Sonia Braga) also learns that Jack is playing the president, and decides to help him be a more convincing president. Meanwhile, Roberto and the rest of the heads of the secret police decide that Jack must continue to play the president, and they will tell him what to do so they can stay in power. If he doesn't, they will kill him and get another actor. As time goes on, Jack becomes more comfortable playing the president, and he and Madonna soon fall in love. However, the role becomes very serious when Jack narrowly avoids an assassination attempt. Jack then learns from the CIA that rebel Communists are about to start a revolution, so Jack, as President Simms, institutes new policies that will help the people and neuter the rebels. These changes anger Roberto, and he threatens to kill Jack unless he revokes them. But Jack tells Roberto that if anything should happen to him or the president, then he and his secret police will be out of power.
More time goes by, and Jack is tiring of the role and wants to go home. He learns that another movie is being filmed in Parador, and he sees that his friend Clint, who works with special effects, is part of the crew. A couple of days later, during the annual Carnival, President Simms is shot from the crowd. As he lay dying, Jack accuses Roberto of being behind the assassination. Roberto is then attacked by the crowd and killed just as President Simms dies. He is placed into an ambulance and Madonna rides along. As it drives away, Jack sits up and praises Madonna for her convincing acting in the fake assassination. He also praises the ambulance driver, who was the shooter and revealed to be Clint. Jack is taken to the airport, and he asks Madonna to come to the US with him, but she refuses. Jack kisses her goodbye and flees Parador with Clint.
The movie concludes a few days later, with Jack at an audition telling some actor friends of his what he has been doing for the past year. He then sees a news report on TV from Parador, and he learns that Madonna is the new President of Parador.