In Los Angeles, career-focused lawyer Fletcher Reede (Carrey) loves his son Max (Cooper), but his inability to keep his promises and the compulsive lying he engages in for his career often cause problems between them and with his former wife Audrey (Tierney), who has become involved with another man named Jerry (Elwes). In court, Fletcher is willing to exaggerate the stories of his clients, and his current client, the self-centered, money-grabbing Samantha Cole (Tilly) has garnered the attention of Mr. Allen, a partner at the law firm in which Fletcher works. If Fletcher wins this case, it will bring his firm a fortune and boost his career. Fletcher calls and lies to Audrey about missing Max's birthday due to work, when he is actually having sex with his boss, Miranda, in order to get a promotion. Dejected, Max makes a birthday wish that for one day his father cannot tell a lie. The wish immediately comes true, and Fletcher accidentally tells Miranda he has "had better" after they have sex.
The following day, Fletcher immediately realizes that he is unable to do anything dishonest. He cannot lie, mislead, or even deceive by withholding a true answer, often uncontrollably blurting out offensive and painful truths that anger his co-workers, and his car ends up in an impound for several parking violations. This comes to a head when he realizes that he is unable to even ask questions when he knows the answer will be a lie, which is inconvenient as Samantha and her alleged affair partner Kenneth Faulk are willing to commit perjury to win the high profile case and he cannot ask him the questions they have been given answers for.
Realizing that Max had wished for this to happen, Fletcher tries to convince him that adults need to lie, but cannot give any type of answer at why he should continue to lie to his son. Fletcher also figures out that since Max wished for him to tell the truth for only one day, he tries to do what he can to delay Samantha's case since the magic wish will expire at 8:15 p.m., 24 hours after Max made the wish. Things only get worse for Fletcher as he loses his loyal assistant Greta after admitting he had lied about the miserly reasons for denying her pay raises and the "expensive" gifts he gave her, and Audrey tells Fletcher that she and Max are moving to Boston with Jerry in order to prevent any more heartbreaks from Fletcher's broken promises.
Fletcher's erratic behavior in court leads to several questions of his sanity as he objects to himself and badgers and provokes his own witnesses into admitting they had an affair against Samantha and her husband's prenuptial agreement. He even goes so far as to beat himself up and claim that someone attacked him in order to try and avoid the case, but when asked if he feels like he can continue, he can't deny it and he says yes. During the case, Fletcher finds a technicality that Samantha lied that she was underage when she signed the prenup prior to her marriage, rendering it void and entitling her to half of Mr. Cole's estate, allowing him to win the case truthfully. But when Samantha decides to contest full custody of their children, who Mr. Cole dearly loves, just because she wants more money from the child support payments, Fletcher regrets mentioning the technicality after seeing Mrs. Cole pull the children out of their father's arms, and shriek her demands for more money. Realizing now that winning the case has punished the loving husband and rewarded the cheating wife, Fletcher has a crisis of conscience and shouts at the Judge demanding that he reverse the decision, but he is arrested for contempt of court. He calls Audrey from the prison's phone and pleads with her to bail him out and give him another chance, but she hangs up on him.
Greta returns and bails Fletcher from jail, who forgives him and realizes that telling the truth has made him a better man and he rushes to the airport to stop Audrey and Max from leaving forever. He misses their flight, but he sneaks onto the tarmac by hiding in a piece of luggage, steals a motorized staircase, and manages to gain the pilot's attention by throwing his shoe at the cockpit window, forcing him to abort the flight. However, Fletcher's victory is cut short when he crashes into a barrier and is sent flying into a baggage tug, which causes a chain reaction that leaves Fletcher unconscious and with both of his legs broken. After waking up, he tells Max how much he cares about him and how sorry he was for breaking his promises. Despite no longer being under the wish's influence, Fletcher means what he says and adds that Max is his priority, and Max convinces Audrey to stay in Los Angeles.
One year later, Fletcher is healed and is running his own law firm with Greta as his continued assistant. Max makes a wish with his birthday cake and the lights come on to reveal Fletcher and Audrey kissing, but explains he wished for rollerblades instead of them reconciling. Fletcher clutches his hands into "The Claw" -a game he likes to play with Max by chasing him - and chases him and Audrey around the house with it.
Output: Why does Audrey want to move to Boston with Max and Jerry?