In 1945 Las Vegas, World War II veteran Frank Harris (Brad Pitt) is transported to an animated realm named the "Cool World", a hellish, twisted city of surreal landscapes and random cartoon violence, following a traffic collision with a drunk driver. Forty-seven years later, detained cartoonist Jack Deebs (Gabriel Byrne) creates a comic strip named Cool World, which features the femme fatale Holli Would (voiced by Kim Basinger). Holli voices her desire to enter the real world, but is declined help from Frank, who is now a detective in the Cool World. After being released from prison, Jack is transported to the Cool World and is smuggled into a club by Holli. Frank becomes aware of Jack's presence in the Cool World and aggressively confronts him, informing him that Cool World has existed long before Jack created the comic series and warns him that "noids", humans from the real world, are not allowed to have sex with "doodles", the inhabitants of the Cool World. Holli brings Jack back into the Cool World and the two have sex, causing Holli to transform into a human.
While Frank attempts to mend his relationship with doodle Lonette (voiced by Candi Milo), he temporarily leaves detective duties to his assistant Nails (voiced by Charles Adler). Jack and Holli leave for the real world, causing damage to the interdimensional barrier between the real world and the Cool World. Frank discovers that Nails has been done away with and decides to venture into the real world to pursue Jack and Holli, who have both begun to flicker between human and doodle states. While contemplating their situation, Holli tells Jack about the "Spike of Power", an artifact placed on the top of a Las Vegas casino by a doodle who crossed into the real world. When Jack displays skepticism about the idea, Holli abandons Jack to search for the spike on her own. When Frank pursues Holli on the casino, Holli kills him by kicking him off the building. Holli finds and takes the Spike of Power, transforming her and Jack (now voiced by Maurice LaMarche) into doodles and opening a gateway between the two worlds, releasing numerous monstrous doodles and a spreading Cool World corruption. Fighting off an increasing number of doodles as a superhero doodle, Jack returns the Spike of Power to its place, trapping him, Holli and the rest of the doodles in Cool World.
Near the end it's revealed that when a noid is killed by a doodle, he is reborn in Cool World as a doodle. On cue, Frank appears in doodle form, allowing him to pursue his relationship with Lonette, while Holli is now stuck with Jack, transformed into a superhero-type doodle.