Middle-aged, simple-minded Chance lives in a wealthy old man's townhouse in Washington, D.C., along with the man's African-American maid Louise, who is kind to Chance. He has spent his whole life tending the garden and never left the property. Other than gardening, his knowledge is derived entirely from television. When the old man dies, his estate lawyers order Chance out.
He wanders aimlessly, discovering the outside world for the first time. An African-American youth points a knife at him; Chance ineffectually tries to click him out of existence with a TV remote control. Passing by a TV shop, Chance sees himself captured by a video camera in the shop window. Entranced, he steps backward off the sidewalk and is struck by a limousine chauffeuring Eve Rand, the glamorous and much younger wife of elderly business mogul Ben Rand. When she asks him his name she mishears "Chance, the gardener" as "Chauncey Gardiner".
Eve brings Chance to their palatial estate to be seen by Dr. Allenby, who is resident there caring for Ben, who is slowly dying from a blood disease. After checking Chauncey out, the doctor invites him to stay to keep an eye on him.
Chauncey’s manners are old-fashioned and courtly, and he wears expensively-tailored but outmoded 1930s clothes he took from his former employer’s attic. When Ben meets him he takes "Chauncey" for an upper-class, highly-educated businessman fallen on hard times. Ben admires him, finding him direct, wise and insightful.
Ben is also a confidant and advisor to the President of the United States, whom he introduces to Chauncey. In a discussion about the economy, Chance takes his cue from the words "stimulate growth" and talks about the changing seasons of the garden. The President misinterprets this as optimistic political advice and quotes "Chauncey Gardiner" in a speech.
Chance now rises to national prominence, attends important events, develops a close connection with the Soviet ambassador, and appears on a talk show during which his detailed advice about what a serious gardener should do is misunderstood as his opinion on presidential policy. Louise tells other African Americans as they watch Chance on TV that he has "rice pudding between the ears" and that whiteness is all that is needed to succeed in America. The President is shown as sexually impotent with his wife when watching the show.
Though Chance has now risen to the pinnacle of Washington society, the Secret Service and 16 other agencies are unable to find any background information on him. Meanwhile, Allenby becomes increasingly suspicious that Chance is not a wise political expert and that his mysterious identity may have a more mundane explanation. Allenby considers telling Ben, but remains silent when he realizes how happy Chance is making him in his final days.
The dying Ben encourages Eve to become close to "Chauncey". She is already attracted to him and makes a sexual advance. Chance has no interest in or knowledge of sex, but mimics a kissing scene from the 1968 film The Thomas Crown Affair, which happens to be on TV. When the scene ends, Chance stops suddenly and Eve is confused. She asks what he likes, meaning sexually; he replies "I like to watch," meaning television. She is momentarily taken aback, but masturbates for his voyeuristic pleasure, not noticing he has turned back to the TV and is imitating a yoga exercise on another channel.
Chance is present at Ben's death and shows genuine sadness. Questioned by Allenby, he admits that he "loves Eve very much" and also that he is just a gardener. When he leaves to inform Eve of Ben's death, Allenby says to himself, "I understand."
While the President delivers a speech at Ben's funeral, the pallbearers hold a whispered discussion over potential replacements for the President in the next presidential term, and unanimously agree on "Chauncey" as successor. Oblivious, Chance wanders off through Ben's wintry estate. He straightens out a pine sapling flattened by a fallen branch, then walks across the surface of a lake without sinking. He pauses, dips his umbrella deep into the water to the right of his path, then continues on, while the President is heard quoting Ben: "Life is a state of mind."