Bruce Nolan (Jim Carrey) is a television field reporter for Eyewitness News on WKBW-TV in Buffalo, New York who, through his continuous coverage of media interest stories, rather than hard news, is unsuccessful at getting a job as an anchorman. He is in love with his girlfriend Grace, and wants to marry her, but is also very attracted to his gorgeous co-worker, Susan. who doesn't even notice him at all. After a series of other incidents of ill fortune in one day, he complains to God that he is treating him (Bruce) unfairly and is doing a poor job as supreme deity. God (Morgan Freeman) then contacts Bruce and grants Bruce all of His power so as to prove which one is the better at doing God's job of taking care of the world (God added that the only limitations of Bruce's new powers is that he cannot say that he is God or interfere with free will). Bruce uses his new-found omnipotent powers for personal gain (e.g. he gets revenge on a street gang who assaulted him earlier in the film and enhances Grace's breasts and sex drive). He gains the status of Mr. Exclusive by presenting news of a meteor hurling down near a local fair, uncovering the corpse of Jimmy Hoffa, and getting the rival news group reporters arrested on charges of possessing marijuana.
Bruce endangers his relationship with Grace through his selfish behavior. God then reminds Bruce that he now has the task of resolving other people's problems. God tells Bruce that if he wants, Bruce can fix all the world's problems in a few minutes, knowing that this is untrue. Bruce receives millions of prayers that only he can hear, all of which, according to God, originate only from a few streets in his own town. Bruce is thus able to realize how much work God must do to keep the cosmos "in line". Reading the prayers in the form of e-mails, Bruce begins to answer them individually, then becomes overwhelmed and merely answers "yes to all" granting them without considering the consequences.
At a party to celebrate his promotion, Bruce attempts to call Grace to get her to come but she doesn't pick up. However, when Grace arrives, Bruce is then seduced by Susan who passionately kisses him. Grace witnesses this and storms off and Bruce try to use his powers to make her stay with him, but fails (because he is unable to intervene regarding free will). Bruce finds that all the prayers he has answered have consequences, such as many people from his town winning the lottery and starting a riot. Bruce then begins to use his powers with more discretion by examining prayers properly and helping others around him, such as a homeless man who has appeared to him at times to convey philosophical speeches. During that day's evening, as Bruce is receiving prayers he looks for one sent by Grace. Upon finding one, he uses his power and discovers Grace praying to God for help to make Bruce a better person and stop loving Bruce because she does not want to be hurt anymore.
Depressed, Bruce walks on to a highway and realizes that God's powers are best left for God to handle. He asks God to take control of his life but is soon struck by an oncoming truck. He is then shown in Heaven, where God asks him what he really wants. Assuming he is dead, Bruce asks that Grace find a man who may make her truly happy and see her through God's eyes, even if it is not Bruce. At this, God zaps him. Bruce's soul falls backwards, down into Bruce's body, where he is revived by paramedics and does not have God's powers anymore, realizing his prayers have been answered. Later, Bruce has returned to his earlier field of reporting and is content with it and becomes engaged to Grace. The ending scene features a slow close-up of the homeless man, whose image morphs slightly and He is revealed to be God.