Interior Chinatown tells the story of Willis Wu, an American actor of Taiwanese descent. Written in the format of a screenplay, the novel begins by establishing the generic, stereotypical roles available to Wu and other Asian-American actors on the police procedural show Black and White. Roles include Disgraced Son and Generic Asian Man.
Wu's family members are also actors. His mother has played Asiatic Seductress, Girl with the Almond Eyes, and Old Asian Woman. His father has played Twin Dragon, Egg Roll Cook, and Old Asian Man. His most prestigious role was as Sifu, a Kung Fu master. Wu, like many others, aspires to play Kung Fu Guy, the most prestigious of roles available on the show for Asian men. His Kung Fu skills are "B, B plus." Wu's older brother was a natural at Kung Fu and played Kung Fu Guy before leaving the show under mysterious circumstances. Wu doesn't remember where he went. The result was that he became a legend.
The stars of Black and White are detectives called White Lady Cop (Green) and Black Dude Cop (Turner). They are also playing stereotypes, but they are stars, not supporting cast. They come to the Golden Palace restaurant in Chinatown to shoot a scene in which Old Asian Man is nearly killed. After the shoot, Wu returns to his single-room occupancy apartment building. His mother gives him a bag of rice dumplings to bring to his father at his own SRO, where he is living in poverty and squalor. Wu remembers when he was young and his mother implored him to become something more than Kung Fu Guy. That night an elderly man in the suite above Wu falls asleep in his shower and drowns, clogging the drain and flooding Wu's floor. The detectives shoot another scene in Chinatown. Wu, in his role as Generic Asian Man, has a speaking role: "Okay. I help you."
Wu's character becomes a recurring Special Guest Star as he helps Turner and Green investigate the death of Dead Asian Man. Older Brother is a suspect. Turner and Wu get into a heated argument in which Turner accuses Wu of being too passive. He says that his success in the show is only a victory within a system of injustice, and therefore he is feeding the system. Wu points out the hypocrisy of the argument. Green eventually intervenes and accuses them both of being macho. The detectives and Wu uncover a gambling den in the back of The Golden Palace. Young Fong, son of the man who drowned in the shower, instigates a gunfight in the den and disappears as henchman battle Wu and the detectives. Karen Lee, an undercover detective, saves Wu's life and then Wu saves Turner's life with a kung fu kick. The revelation that Wu has been shot in the stomach undermines the heroic moment. It seems he is dying.
Having been killed off on the TV show, Wu can't be recast until 45 days have passed, as that is how long it takes for the audience to forget a character ever existed. As a child he liked it when his mother was killed off because they could spend time together. His parents are both from Taiwan. His father watched soldiers murder his own father during the 228 Incident, an anti-government uprising that led to the deaths of thousands of civilians. When he moved to America as a student, Wu's father was called a Chinaman and a Jap routinely by racists. Wu's parents married and settled into their SRO after racial discrimination prevented them from renting anywhere else. The cartoonish, belittling roles he played caused Wu's father to drink and become abusive to his wife and son, prompting him to isolate from them.
Wu dates Karen Lee, who is of mixed white and Taiwanese descent. He begins climbing the hierarchy on the TV show and learns that he is close to being cast as Kung Fu Guy. He tells Karen, who reveals that she is pregnant. He proposes and she says yes. The story moves ahead to their daughter Phoebe being born. The three live in an SRO until Wu has enough money for a house. Karen gets a role on another show and asks him to come play a supporting role. Wu still wants to play Kung Fu Guy, however, and the couple separate under the pretext of working on their own careers. Wu is finally cast as Kung Fu Guy, but he is alone with his success. Wu hot-wires Turner's police car and drives off the set, evading the police who chase him.
Wu now plays Kung Fu Dad in a show where his daughter is cast as a happy-go-lucky Chinese-American girl called Mei Mei. Karen is cold toward Wu as they discuss their divorce in the format of an educational segment of the Mei Mei show. Wu learns of his daughter's imagination and aspirations. He realizes his life was a generational bridge to his daughter having a comfortable, assimilated American life. He adopts the role of stay-at-home Dad, no longer interested in kung fu. However, the police come to arrest Wu for stealing the cop car and leaving Chinatown. Wu tells Karen he wanted the cast of the show to see his happy family.
Wu appears in court. The trial begins with a review of historical anti-Asian laws in the US, prohibiting land ownership and limiting immigration. Older Brother turns up in court to defend Wu, reminding him he went to law school after he quit acting. Turner accuses Wu of having internalized an irrational sense of inferiority to white and black people. Older Brother argues that Asian Americans have their own history of discrimination in the US, which has resulted in Asian people being regarded as perpetual foreigners, homogenized into Chinatown to appear simplified to mainstream America.
The judge finds Wu guilty. In an emotional speech, Wu admits he is guilty of putting himself in the category of Generic Asian Man, and that even Kung Fu Guy is a variation of this type. Even Kung Fu Dad wasn't just another role. As the crowd in the courtroom becomes raucous, Older Brother and Wu try to kung fu fight their way out of the room—"plan B." In the chaos a gun goes off and Wu dies. Turner and Green stand over his body and deliver lines. Wu opens his eyes and says he can't do this anymore. The detectives agree and wish him well. He opens his eyes again and is with his mother, ex-wife, and daughter.
The novel ends with EXT. Chinatown, an epilogue in which Wu sees his father and daughter in the kitchen together. Wu comments on how Chinatown was an illusion and a prison that kept his father trapped. But his daughter can move between worlds, and maybe teach her father and grandfather to do the same. The book closes with Wu's father about to take the stage to sing a karaoke song.