C.C. Baxter is an up-and-comer at Consolidated Life Insurance in New York City. Baxter is popular among some of the more influential executives at the company; this popularity is not due to any particular talents or aptitude, but to the fact that he is willing to lend out his Upper West Side apartment to them as a place to carry on extramarital affairs. While Baxter must find ways to occupy himself after work, executives carry on noisy affairs in his apartment, causing his neighbors, Dr. Dreyfuss and his wife, to think that Baxter is a hard-partying playboy.
The executives who use his apartment include Mr. Kirkeby and Mr. Dobisch. One day, another executive, Mr. Sheldrake, calls Baxter into his office to give him a promotion after hearing Kirkeby and Dobisch's glowing reports. He then requests to use Baxter's apartment for his own affair that evening. In exchange, he gives Baxter two Broadway tickets to The Music Man for that evening. Baxter accepts, and on his way out of the office asks his office crush, an elevator girl named Fran Kubelik, to come with him to the play. She tells him she has a drinks date with a man she used to be romantically involved with, but that she will meet Baxter at the theater right before the curtain rises.
It turns out that the old flame that Fran is meeting after work is Mr. Sheldrake. She is planning to break it off with him once and for all that evening, but Sheldrake somehow manages to convince her that he will soon be leaving his wife, allowing them to be together once and for all. Falling for Sheldrake's act, Fran spends the evening with him at Baxter's apartment, standing Baxter up.
Baxter receives a promotion the following day (Christmas Eve) and moves from his impersonal desk in the middle of the room to his own office. When he meets with Sheldrake, he gives him a small cracked compact mirror that Sheldrake's mistress left at his apartment. Sheldrake tells him that he and his mistress got in a fight, which is why the mirror is broken. Later, an office Christmas party begins and Baxter asks Fran to attend with him. While he is getting drinks, Sheldrake's secretary approaches Fran and tells her that Sheldrake has had a string of affairs, but never leaves his wife. When Baxter comes back with a drink, Fran seems upset and pulls out a compact mirror. It is the same cracked one that Baxter returned to Sheldrake and he realizes that it is Fran with whom Sheldrake has been having an affair. Sheldrake requests to use the apartment again that night, so Baxter posts up at a bar, downing martinis.
At Baxter's apartment, Fran is upset with Sheldrake because of what his secretary, Ms. Olsen, told her. He tries to pacify her with $100, before going home to his wife and family in White Plains. Left alone in the apartment, Fran finds a bottle of Baxter's sleeping pills and overdoses. Baxter returns home from the bar with a woman, Margie, and is alarmed to find the unconscious body of Fran on his bed. He calls his neighbor Dr. Dreyfuss over and they revive Fran. In order to protect Fran and Sheldrake's reputations, Baxter lies to Dr. Dreyfuss that he was the one having the affair with her. The next morning Baxter calls Sheldrake and tells him what happened, but Sheldrake is coldly indifferent, and even a little annoyed. Baxter lies to Fran that Sheldrake was very concerned, and the two of them play cards in Baxter's bed. At one point, Mr. Kirkeby comes over with his mistress hoping to use the apartment, but Baxter turns him away. Before he leaves, however, Kirkeby sees that Fran is in Baxter's bed and mistakes the whole thing for an affair.
The next morning, Sheldrake fires Ms. Olsen for telling Fran about his affairs. Before she leaves, she listens in on a phone call that Sheldrake makes to Baxter and hears him talking to Fran about her suicide attempt and their affair. Ms. Olsen promptly calls Mrs. Sheldrake and asks her to meet for lunch, planning to tell her about the affair. Fran's brother-in-law, a tough cab driver named Tim, comes into the office and asks where Fran is. Kirkeby informs him that she's having an affair with Baxter.
At Baxter's apartment, Baxter cooks spaghetti for himself and Fran and they each talk about their romantic problems. Baxter confides that he too almost committed suicide over an affair. They are interrupted by Tim, who wants Fran to come home immediately and punches Baxter in the face before leaving. The next day at work, Baxter goes up to Sheldrake, planning to tell him that he will happily marry Fran in order to take her off Sheldrake's hands. But before he can propose this solution, Sheldrake informs him that his wife found out about the affair from Ms. Olsen, so he will be leaving her and marrying Fran once and for all. Sheldrake then promotes Baxter to be his assistant as a reward for all his help.
Baxter is crestfallen, but doesn't know what to do. On New Years' Eve, when Sheldrake asks to use Baxter's apartment again to spend the evening with Fran, Baxter tries to say no, but Sheldrake threatens to fire him over it. Baxter hands over a key, but Sheldrake soon realizes that it isn't a key to his apartment, but to the executive washroom. Baxter is quitting, and he walks out of the office for the last time. Baxter goes home to pack up his apartment and leave New York City, while Fran goes out to a bar with Sheldrake to celebrate New Years' Eve. At the bar, Fran realizes that she doesn't love Sheldrake, and decides to leave him. She goes to Baxter's apartment. When she hears a loud popping noise, she mistakes it for a gunshot and thinks that Baxter is killing himself. When she runs to his door, she finds that he was only popping a champagne cork and goes inside. Baxter tells Fran that he loves her as she takes out a pack of cards and they begin to play.