Plot

A cop turns con man once he comes out of the closet. Once imprisoned, he meets the second love of his life, whom he'll stop at nothing to be with.

Steven Russell is happily married to Debbie, and a member of the local police force when a car accident provokes a dramatic reassessment of his life. Steven becomes open about his homosexuality and decides to live life to the fullest - even if it means breaking the law. Steven's new, extravagant lifestyle involves cons and fraud and, eventually, a stay in the Texas State Penitentiary where he meets sensitive, soft-spoken Phillip Morris. His devotion to freeing Phillip from jail and building the perfect life together prompts Steven to attempt and often succeed at one impossible con after another.—The Film Catalogue

Incarcerated at the Texas State Penitentiary, con artist Steven Russell (Carrey) meets the love of his life: Phillip Morris (McGregor). As a free man, his passion results in a series of improbable cons to bust Phillip from jail and build the perfect life together.

Steven Russell would admit that most of his life has been a lie, those lies starting when he found when he was an adolescent that he was adopted. Those lies include being a closet homosexual while being married to a woman named Debbie, and committing continual fraud to support the lavish lifestyle associated with being what he considers the epitome of a gay lifestyle once he does come out. In prison for committing those acts of fraud, Steven falls in love at first sight with fellow inmate Phillip Morris, a shy, quiet gay man. Phillip, in return, falls in love with Steven. But in providing what he feels Phillip would want in life, especially if they make it out of prison together, Steven may feel like he has to resort to what he knows best, that being fraud. Phillip, on the other hand, if he finds out about what Steven is up to, may not be able to tolerate the behavior despite never having met a man who makes him feel like Steven does.—Huggo

The story begins with Stephen Russell (Jim Carrey), lying weak in a hospital bed, recalling the events of his life that led him there. He begins with his mundane life in Texas as a police officer with a pious wife (Leslie Mann) and a young daughter. Stephen spends his off hours searching for the biological mother who gave him up as a child. He had been hiding the fact that he is gay for his entire life.

After finally finding his biological mother and being handily rejected (a flashback shows a young Stephen watching clouds with his friends, commenting that one cloud "looks like a wiener"), and later surviving a car crash, Stephen decides to live the rest of his life as his true self. He breaks the news to his wife, who is fairly accepting, and keeps in touch with her and his daughter while he pursues a new life as an openly gay man. He moves to Miami, finds a boyfriend (Rodrigo Santoro) and begins a happy new life. He realizes quickly though, that "being gay is really expensive", leading him to become a con man to support his lifestyle. But when his financial frauds finally catch up with him, Stephen is sent to prison where he meets a sweet and soft-spoken inmate, Phillip Morris (Ewan McGregor). They instantly bond, but Phillip (who was arrested for keeping a rental car too long) is transferred to another prison location. determined to be with Phillip, Stephen pulls some strings and has himself transferred to the other location and shares a cell with Phillip. Their romance blossoms.

Stephen is released from jail, and manages to get Phillip freed as well by posing as a lawyer. They happily begin a life together, and Stephen cons his way into a high-paying job as a financial manager. However, he slips even further back into his old ways, and is soon embezzling large amounts of money from the company. This begins to land him in hot water, and Phillip suspects there is something that Stephen is not telling him. He is soon caught and sent back to prison, with Phillip being arrested as an accomplice. A furious Phillip is incredibly hurt by Stephen's lies, and refuses to see him again.

Soon afterward, Stephen shows signs of illness and is diagnosed with AIDS. He is sent to an outside hospital. Phillip is told the news by another inmate and is told that Stephen has very little time left. Phillip calls Stephen in the hospital, breaking down and telling him that, while he is still angry, he will be in love with Stephen always. Stephen is moved to tears.Later, Phillip receives the news that Stephen had died.

Phillip is later called to a private meeting with his "lawyer," and finds Stephen waiting for him in perfect health. Phillip slaps him in the face, and Stephen explains how he had faked the entire illness (including altering medical forms) to get out of jail and see Phillip again. Stephen thought of his plan when sadly remembering his last boyfriend, Jimmy, who had succumbed to the disease. He swears to never lie again. He attempts one last con to break Phillip out, but is caught again after running into a co-worker from the company he had stolen from. Sent back to jail again, Stephen is put on 23-hour lockdown, with only one hour a day to exit his cell. Phillip was released in 2006.

The last scene shows Stephen, who has never given up on his goal of being with Phillip, laughing joyfully while running across the prison yard pursued by guards.

From there the story becomes a Don Quixote-esque story of a forlorn lover who cannot bear to be separated from his soul-mate. He will go to any lengths to be with Phillip, including but not limited to breaking out of jail on multiple occasions, impersonating Phillips lawyer and fraudulently becoming the CFO of a major corporation.