Captain Navarre (Rutger Hauer) and Isabeau (Michelle Pfeiffer) are lovers who are under the spell of the Bishop of Aquila (John Wood). This spell turns Navarre into a wolf at dusk and Isabeau into a hawk at dawn. They then return to human form at the same time their lover changes into their animal form. Mouse (Matthew Broderick) is a thief who's life was saved by Navarre while escaping prison and is now indebted to him.
Father Imperius (Leo McKern) tells Captain Navarre and Isabeau that the only way the spell can be broken is to confront the Bishop of Aquila when both of them are in human form. That can only happen on the day "where there is day without night and night without day", amd there will be a sign from God as to when this will happen. Captain Navarre doesn't believe that will ever happen, so he plans to go to the city of Aquila to kill the bishop. Imperius tells him that killing the bishop means the spell can never be broken, but Navarre wants to kill him anyway.
Navarre plans to kill the bishop during a service that is in a locked room. Mouse sneaks into that room and unlocks the door, but Marquet (Ken Hutchison), the bishop's top henchman, is waiting for him. Navarre enters the room and fights Marquet, eventually killing him. During the fight, a stained-glass window is broken, revealing the solar eclipse that is happening at that exact time. Navarre sees the eclipse and realizes this is the sign that Imperius meant and that the spell can be broken. Navarre and Isabeau, now able to be in their human form at the same time, confront the bishop. Once he sees them in their human forms, the spell is immediately broken. Navarre then kills the bishop, and he and Isabeau kiss.