The movie opens with scratchy camcorder footage of a teenage girl reclining on a bed, complaining about her father, who is boring, socially awkward and a general embarrassment. A man off-camera, presumably the wielder of the camcorder, asks, "You want me to kill him for you?" She thinks for a moment, and then says, "Yeah. Would you?"

The movie then begins again with Lester Burnham (Spacey), a 42-year-old father and advertising executive for a magazine. His self-narration, however, comes from somewhere else than here: "In less than a year," he says to the audience, "I'll be dead. Of course, I don't know that yet. And in a way, I'm dead already." It soon becomes clear why: his family life is a mess. His wife Carolyn (Benning) is an ambitious, pretentious realtor with little on her mind but success: "My company sells an image. It's part of my job to live that image." His 16-year-old daughter Jane (Birch), clearly recognizable from the opening camcorder footage, is contemplating breast implants. They haven't spoken to each other for months. And Lester himself is a self-described loser: boring, faceless and easy to forget. "I have lost something. ... But you know what? It's never too late to get it back."

Lester's impetus for transforming himself from loser to winner is a classmate of Jane's: Angela Hayes (Suvari), a beautiful, confident and worldly girl with aspirations of being a model. "There's nothing worse in life than being ordinary." Lester meets her when he and Carolyn come to a basketball game to watch them cheerlead, and develops an immediate and obvious crush on her, much to Jane's embarrassment. That night, Jane finds someone videotaping her with a camcorder—a fact that secretly flatters her. When Jane has Angela stay for a sleepover, Lester overhears Angela saying she'd "totally fuck him" if he worked out, and immediately starts doing so.

The next morning we are introduced to the family that has just bought the vacant house next door: Col. Frank Fitts, USMC (Cooper), his wife Barbara (Janney) and son Ricky (Bentley). When confronted by the openly gay couple two houses over (Jim Olmeyer and Jim Berkley, Bakula and Robards respectively), Fitts shows distinctly bigoted attitude; Barbara spends entire days zoned out, and Ricky is making far more money than a high-schooler should. He is also revealed to be the person with the camcorder, and when he gets to school he approaches Jane and Angela with almost eerie confidence. "I'm not obsessing," he says, "I'm just curious."