Hal Larson spends his nights being rejected by beautiful women at night clubs with his friend Mauricio. Hal's work life is steady, but he is dismayed after being passed over for a long-sought promotion. Hal is attracted to his neighbor Jill, but she rejects him due to his shallow lifestyle. One day, Hal becomes trapped in an elevator with life coach Tony Robbins, who hypnotizes him into only seeing a person's inner beauty. Hal, not realizing he has been hypnotized, meets Rosemary, the daughter of Steve, the president of the company where he is employed. Rosemary is morbidly obese, but Hal is immediately smitten with her as his hypnosis causes him to see her as a slender and beautiful trophy blonde. Used to being overlooked due to her appearance, Rosemary initially interprets Hal's interest as mockery, but soon realizes his feelings for her are sincere and they begin to date.

Mauricio, worried about Hal's new taste in women, convinces Tony to give him the trigger phrase to undo the hypnosis, which is "Shallow Hal wants a gal". During a dinner date, Rosemary tells Hal she has been asked by the Peace Corps to go on a 14-month mission in Kiribati. Mauricio phones Hal and says the trigger phrase, breaking the hypnosis. Mauricio then arrives at the restaurant and drags Hal out before he can see the real Rosemary, before telling him the truth about Tony's hypnotherapy. Hal does not believe him until he runs into Katrina, a woman who initially appeared beautiful to him but is now very physically unattractive. Hal begins to avoid Rosemary, who becomes depressed as a result. Jill, having observed Hal overcoming his shallow nature through his relationship with Rosemary, develops an interest in him and invites him out for dinner. While on the date with Jill, Hal realizes his true feelings for Rosemary who has, coincidentally, arrived at the same restaurant with her family and sees the two sitting together. Assuming the worst, Rosemary leaves in tears. Not recognizing Rosemary, Hal walks right by her on his way to a payphone to call her and reassure her of his feelings. Confused and distraught, Rosemary insults him and effectively breaks up with him.

Five days later, Steve informs Hal that Rosemary’s ex-boyfriend and Peace Corps partner, Ralph, wants to be in a relationship with her again. Hal attempts to find Rosemary, but instead encounters a young patient named Cadence at the hospital where Rosemary volunteers. Due to the hypnosis, Hal had previously seen Cadence as a perfect little girl, but now sees that she is severely burned. Inspired by Cadence, Hal changes his views on outer beauty in general and goes after Rosemary. Mauricio confesses that he stopped Hal's hypnosis out of envy towards his happiness; he has an inoperable vestigial tail which has prevented him from ever getting close to a woman. Hal convinces Mauricio to accept his abnormality.