In a highly structured and bureaucratic state, the government has installed extreme and highly counterproductive measures for which to track down terrorists. A "bug" in the system mixes up the last name of terrorist Harry Tuttle (Robert De Niro) and an innocent man, named Buttle (Brian Miller). Thus, Buttle is arrested and died from heart problems while Tuttle continues to roam free. Sam Lowry (Jonathan Pryce), an average man with a mother who "knows people", is assigned to investigate the error. At the same time, Jill Layton (Kim Greist), Buttle's neighbor, is trying to report the mistake to authorities. Due to the extremely inefficient bureaucracy, she finds the process to be very tedious. Meanwhile, Sam, who has been dreaming about Jill, gets sidetracked by his fantasies and ends up also being a victim of the counter productivity of the government.