Stanley Ipkiss, a clerk in an Edge City bank, is a shy, luckless romantic regularly bullied by nearly everyone he is around, whose only friends are his Jack Russell Terrier, Milo and his co-worker Charlie Schumaker. Meanwhile, gangster Dorian Tyrell operates a nightclub called the Coco Bongo while plotting to overthrow his boss Niko. Tyrell sends his singer girlfriend Tina Carlyle into Stanley's bank to record its layout, in preparation to rob the bank.
Stanley is attracted to Tina, and she seems to reciprocate. After being kicked out of the Coco Bongo later that night, at the city's harbor, he finds a mysterious wooden mask, which, when he dons it, changes him into a zoot-suited, green-faced trickster able to act with immense impunity, who exacts comical revenge on some of Stanley's tormentors, such as the mechanics who ripped him off the night before, and scares a street gang that attempts to rob him by turning a balloon into a tommy gun.
The next morning, Stanley encounters detective Lieutenant Kellaway and newspaper reporter Peggy Brandt investigating the Mask's activity. Despite these threats, he again becomes the Mask; and needing money to attend Tina's performance, steals the money sought by Tyrell. At Tyrell's club, the Mask dances exuberantly with Tina. At the end of the dance, the Mask gives Tina a kiss, but is then confronted by Tyrell, and flees, leaving behind a scrap of cloth belonging to himself (part of his pajamas).
Kellaway accuses Stanley of the bank-robbery, but he escapes trouble and later consults an expert on masks named Arthur Neumann, who tells him that the object is a depiction of Loki, the Norse god of darkness and mischief. Despite this, Stanley arranges for Tina to meet the Mask at the local Landfill Park. The meeting is just about to go well when Lt. Kellaway attempts to arrest him. The Mask then toys with the officer before leaving the park and tricking a large group of Edge City police officers into joining him in a mass-performance of the Desi Arnaz song Cuban Pete. After having removed the mask, Stanley is helped by Peggy to escape, but she betrays him to Tyrell for a $50,000 bounty. Tyrell tries on the mask and becomes a demonic monster. Forced to reveal the location of the stolen money, Stanley is kept hostage in one of the mob's cars while Tyrell's henchmen reclaim the money. Stanley is later given to Kellaway to be imprisoned.
When Tina visits Stanley in prison, he urges her to flee the city, and Tina in return thanks Stanley for treating her with respect, also telling him that she knew that he was the Mask all along. She attempts to leave the city, but is pursued by Orlando and cornered by Tyrell, who takes her to his raid of a charity ball hosted by Niko and attended by the city's elite, including the city's mayor Mitchell Tilton. Upon arrival, the masked Tyrell kills Niko, and prepares to destroy both the club and Tina. Milo helps Stanley escape prison, and they, bringing Lt. Kellaway as a cover and hostage, go to stop Tyrell.
After the brief, initial success of securing the assistance of Charlie, Stanley is spotted by Orlando and captured. Tina tricks Tyrell into taking off the mask, which is recovered and donned by Milo, turning the dog into a cartoonish pitbull who defeats Tyrell's men, while Stanley fights Tyrell. Stanley then recovers the mask and uses its abilities to save Tina by swallowing Tyrell's bomb and flushing Tyrell down the drain of the club's ornamental fountain. The police arrive and arrest Tyrell's remaining henchmen; Kellaway tells Stanley that he's under arrest again, but then Mayor Mitchell Tilton comes up to everyone and announces that Tyrell was The Mask the whole time as a way for Kellaway to let Stanley go. Tilton tells Stanley that he is a hero, and thanks him for saving lives. He goes on to say that he needs to have a meeting with Kellaway in his office the next morning.
As the sun rises the following day, Stanley, Tina, Milo, and Charlie take the mask back down to the harbor, where Tina throws it into the water. Charlie attempts to retrieve the mask for himself, only to find Milo swimming away with it.