Long-time friends, temporary roommate and coffee-house guitarist Troy (Ethan Hawke) and budding filmmaker Lelaina (Winona Ryder) are attracted to each other, though it's an attraction that neither of them has really acted upon, one alcohol-influenced event in the past notwithstanding. He's a slacker, nihilist and grunge rock musician by night, losing job after job in a series of minimum wage dead end endeavors during the day - the last of which he loses early in the film for stealing a candy bar from his employer. Lelaina on the other hand was valedictorian of her university, and has aspirations to become a documentarian, although initially having to settle for a position as production assistant to an obnoxious TV host.
Lelaina meets Michael (Ben Stiller) when she throws a cigarette into his convertible, causing him to crash into her car. The two soon begin to date. He works at an MTV-like cable channel called "In Your Face" as an executive, and after learning about a documentary she's been working on, wants to get it aired on his network.
Lelaina's roommate Vickie (Janeane Garofalo) has a series of one night stands with dozens of guys (In some cases she doesn't even remember their name), motivated by a fear of being alone; her promiscuity leads her to confront a very-real risk of contracting AIDS after a former fling tests positive for HIV.
Friend Sammy (Steve Zahn) is gay; he remains celibate, not because of a fear of AIDS, but because forming a relationship would force him to come out to his conservative parents. He later decides to come out to his mother.
After an impulsive act of retribution, Lelaina loses her job, which causes some tension with her roommates.
Vickie's AIDS test comes back negative and Sammy comes out to his parents (and he even starts dating) and the two manage to resume their lives.
Lelaina's relationship with Michael dissolves after he helps her sell the documentary to his network, only to let them edit it into a stylized montage that she feels compromises her artistic vision.
Lelaina and Troy then sleep together and confess their love. The morning after, he avoids her and, after a messy confrontation, leaves town.
After Troy's father dies, he forces himself to reevaluate his priorities, deciding to attempt a relationship with Lelaina.
Eventually, Troy and Lelaina reunite and make amends after Troy returns from his father's funeral. While we do not see what happens to Michael, during the credits there is an abrupt break where two characters, "Laina" and "Roy," who are obvious parodies of Lelaina and Troy, have an argument about their relationship and as the "show's" credits roll, Michael's name is revealed as the producer, implying that he has turned the failed relationship into the subject of a new show on his network.