The film starts with Leonard (Phoenix) walking along a foot bridge over the Sheepshead Bay creek in Brooklyn with dry cleaning when he drops the clothing and jumps into the water in an attempted suicide. He changes his mind and surfaces to be helped by a random passersby. After walking home to his parents apartment and his mother seeing him dripping wet it becomes evident that Leonard has emotional problems and had tried to kill himself before. His parents tell him that a potential business partner and his family are invited for dinner. When they arrive Leonard finds out that he had been set up with the other family's daughter, Sandra (Shaw). He hits it off with Sandra and tells her how he had been engaged several years before but the relationship broke off because genetic counselling showed that he and his fiancee could not have had healthy children.
A few days later, Leonard meets a new neighbor Michelle (Paltrow) in his apartment building hall. He is immediately attracted to her and spends time with her and goes out on the town with her and her friends. He finds out that she is dating a married partner in her law firm, Ronald (Koteas). Leonard later meets Ronald and Michelle for dinner at an upscale restaurant in the city. He goes home upset but then Sandra surprises him at home where they have sex. The next day he tells Michelle he no longer wants to see her and becomes further involved in a relationship with Sandra. After a while he is asked to photograph Sandra's brother's Bar Mitzvah. Afterward, Michelle calls him upset and says that she is sick.
He takes Michelle to the hospital where she is treated for a miscarriage. She had not known she was pregnant. Then he takes her home and while talking to her, Ronald unexpectedly arrives. Leonard hides behind a door while Ronald apologizes to Michelle for not having come to the hospital and that he was going on a trip to London for two weeks.
However, Michelle is cross with him and sends him away quickly. She then asks Leonard to console her and caress her hand until she falls asleep, which he does. Two weeks later Michelle calls Leonard and meets him on the roof. She tells him that she has broken off the relationship with Ronald and is going to San Francisco. Leonard tells her not to go because he loves her and they make love on the roof.
He later agrees that he will go with her the next day. He buys two tickets online, purchases an engagement ring, and then packs for his trip. At noon on the next day Sandra's father talks to him offering him a partnership in the soon to be merged family businesses believing that he is going to marry Sandra. The next day, during his parents New Year's Eve party, Leonard ducks out to the courtyard to meet Michelle where she tells him that she isn't going to San Francisco because Ronald had left his wife and will marry her. Distraught, Leonard heads out to the beach apparently to kill himself. As he steps in the ocean, he drops a glove that Sandra had bought for him earlier.
He picks up the glove, returns to the party, and seeing Sandra gives her the ring..