Sherman McCoy is a successful New York City bond trader. His $3 million Park Avenue co-op apartment, combined with his wife's extravagances and other expenses required to keep up appearances are depleting his great income, or as McCoy calls it, a "hemorrhaging of money." McCoy's secure life as a self-regarded "Master of The Universe" on Wall Street is gradually destroyed when he and his mistress, Maria Ruskin, accidentally enter the Bronx at night while they are driving back to Manhattan from Kennedy Airport. Finding the ramp back to the highway blocked by trash cans and a tire, McCoy exits the car to clear the way. Approached by two black men whom they perceive as predators, McCoy and Ruskin flee. After Ruskin takes the wheel of the car to race away, it fishtails, apparently striking one of the two would-be assailants—a "skinny boy."
Peter Fallow, a has-been, alcoholic journalist for the tabloid City Light, is given the opportunity of a lifetime when he is persuaded to write a series of articles about Henry Lamb, a black youth who has said he has been the victim of a hit and run by a wealthy white driver. Fallow cynically tolerates the manipulations of Reverend Bacon, a Harlem religious and political leader who sees the hospitalized youth as a projects success story gone wrong. Fallow's articles on the matter ignite protests and media coverage of the Lamb case.
Up for re-election and accused of foot-dragging in the Lamb case, the media-obsessed Bronx County District Attorney Abe Weiss pushes for McCoy's arrest. The evidence includes McCoy's car (which matches the description of the vehicle involved in the alleged hit and run), plus McCoy's evasive response to police questioning. The arrest all but ruins McCoy; distraction at work causes him to flub on finding an investor for a $600 million bond on which he had pegged all his hopes of paying the loan on his home and covering his family costs. While McCoy is reprimanded by his boss for failing to sell the bond, his lawyer, Tommy Killian, calls to tell him of his upcoming arrest, forcing him to admit his legal problems to his boss, who makes him take a leave of absence as a result. McCoy's upper class friends ostracize him, and his wife leaves him and takes their daughter Campbell (McCoy's only source of genuine family love) to live with his parents.
Hoping to impress his boss as well as a former juror, Shelly Thomas, Assistant District Attorney Larry Kramer prosecutes the case, opening with an unsuccessful bid to set McCoy's bail at $250,000. Released on $10,000 bail, McCoy is besieged by demonstrators who are protesting outside his home.
Fallow hears a rumor that Maria Ruskin was at the wheel of McCoy's car when it struck Lamb but has fled the country. Trying to uncover the truth, on the pretense of interviewing the rich and famous, Fallow meets with her husband, Arthur, at an expensive French restaurant. While recounting his life, Arthur has a fatal heart attack, as disturbed patrons and an annoyed maître d'hôtel look on. Maria is forced to return to the United States for his funeral, where McCoy confronts her about being "the only witness." Fallow overhears that she, not McCoy, was driving.
Fallow's write-up of the association between Sherman McCoy and Maria Ruskin prompts Assistant D.A. Kramer to offer her a deal: corroborate the other witness and receive immunity, or be treated as an accomplice. Ruskin recounts this to McCoy while he is wearing a wire. When a private investigator employed by Killian discovers a recording of a conversation that contradicts Ruskin's statement to the grand jury—a recording that was obtained from an illegal voice-activated intercom device installed by the landlord of a rent-controlled apartment as a way to remove tenants—the judge assigned to the case declares her testimony "tainted" and dismisses the case.
Fallow later wins the Pulitzer Prize and marries the daughter of City Light owner Sir Gerald Steiner, while Ruskin has escaped prosecution and remarried. McCoy's first trial ends in a hung jury, split along racial lines. Kramer is removed from the prosecution after it is revealed he was involved with Shelly Thomas in a sexual tryst at the apartment formerly used by Ruskin and McCoy. It is additionally revealed that McCoy has lost a civil trial to the Lamb family and, pending appeal, has a $12 million liability, which has resulted in the freezing of his assets. The all-but-forgotten Henry Lamb succumbs to his injuries from the accident; McCoy, penniless and estranged from his wife and daughter, awaits trial for vehicular manslaughter.
