Theater director Caden Cotard (Philip Seymour Hoffman) is mounting a new play. His life catering to suburban blue-hairs at the local regional theater in Schenectady, New York is looking bleak. His wife, Adele (Catherine Keener) has left him to pursue her painting in Berlin, taking their young daughter, Olive (Sadie Goldstein) with her. His therapist, Madeleine Gravis (Hope Davis), is better at plugging her best-seller than she is at counseling him. A new relationship with the alluringly candid, Hazel (Samantha Morton) has prematurely run aground. And a mysterious condition is systematically shutting down each of his autonomic functions, one by one.
Worried about the transience of his life, he leaves his home behind. He gathers an ensemble cast into a warehouse in New York City, hoping to create a work of brutal honesty. He directs them in a celebration of the mundane, instructing each to live out their constructed lives in a growing mockup of the city outside.
However, as the city inside the warehouse grows, Caden's own life veers wildly off the tracks. Somewhere in Berlin, his daughter is growing up under the questionable guidance of Adele's friend, Maria (Jennifer Jason Leigh). His lingering attachments to both Adele and Hazel are causing him to helplessly drive his new marriage to actress, Claire (Michelle Williams) into the ground. Sammy (Tom Noonan) and Tammy (Emily Watson), the actors hired to play Caden and Hazel, are making it difficult for the real Caden to revive his relationship with the real Hazel. The textured tangle of real and theatrical relationships blurs the line between the world of the play and that of Caden's own deteriorating reality.
The years rapidly fold into each other, and Caden buries himself deeper into his masterpiece. As he pushes the limits of his relationships, both personally and professionally, a change in creative direction arrives in Millicent Weems (Dianne Wiest), a celebrated theater actress who may offer Caden the break he needs.