Set in New York City in 1985, the play opens with Louis Ironson, a gay Jew, learning that his lover, WASP Prior Walter, has AIDS. As the play and Prior's illness progress, Louis becomes unable to cope with the emotional stress and moves out. Meanwhile, closeted homosexual Mormon and Republican Joe Pitt, a law clerk in the same judge's office where Louis holds a clerical job, is offered a major job opportunity by his mentor, the McCarthyist lawyer Roy Cohn. Joe doesn't immediately take the job because he feels he has to check with his Valium-addicted, agoraphobic wife, Harper, who is unwilling to move. Roy is himself deeply closeted, and soon discovers that he has AIDS.
As the seven-hour play progresses, Prior is visited by ghosts and an angel who proclaim him to be a prophet; Joe finds himself struggling to reconcile his religion with his sexuality; Louis struggles with his guilt about leaving Prior and begins a relationship with Joe; Harper's mental health deteriorates as she realizes that Joe is gay; Joe's mother, Hannah, moves to New York to attempt to look after Harper and meets Prior after a failed attempt by Prior to confront Hannah's son; Harper begins to separate from Joe whom she has depended upon and finds strength she was unaware of; and Roy finds himself in the hospital, reduced to the companionship of the ghost of Ethel Rosenberg and his nurse, Belize, a former drag queen and Prior's best friend, who meanwhile has to deal with Louis's constant demands for updates on Prior's health. The subplot involving Cohn is the most political aspect of the play. Portrayed as a self-loathing, power-hungry hypocrite, he prides himself on his political connections and influence, which he has amassed through decades of corruption. In the play, he recollects with pride his role in having Ethel Rosenberg executed for espionage. He uses his connections to procure a massive stash of AZT. As he lies alone in the hospital, dying of AIDS, the ghost of Rosenberg sings him the Yiddish lullaby "Tumbalalaika," and then brings him the news that the New York State Bar Association has just disbarred him, destroying his final hope of dying as a lawyer. Meanwhile, Belize informs Louis that Joe is "Roy Cohn's buttboy," leading Louis to search in the judicial archives and discover the extremely reactionary judicial opinions of which Joe is the actual author. Louis confronts Joe with these; in the ensuing argument, Joe strikes Louis and bloodies his face, after which Louis attempts unsuccessfully to have Prior take him back.
The play ends on a note of optimism. After Cohn dies and Prior's friends procure for him a share of Cohn's supply of AZT, in 1990 Prior is still alive and is managing to live with AIDS. With his friends, he looks at the statue of an angel in Bethesda Fountain and talks of the legend of the original fountain, and how it will flow again some day. Harper seems to have regained some, if not all, of her sanity and informs Joe that she is taking his credit cards and moving to San Francisco, a city which has been compared in various ways to Heaven in the course of the play.
The play is deliberately performed so that the moments requiring special effects often show their theatricality. Most of the actors play multiple characters. There are heavy Biblical references and references to American society, as well as some fantastical scenes including voyages to Antarctica and Heaven, as well as key events happening in San Francisco and at Bethesda Fountain in Central Park.