On Christmas Eve Mark Cohen, a wannabe filmmaker, begins a new documentary, as his roommate, Roger Davis, an aspiring guitarist are interrupted by a call from Mark's mother, who claims she was sorry to hear about his break-up with Maureen Johnson. Roger and Mark's friend Tom Collins, a gay anarchist and college professor, arrives at their building but is mugged. Meanwhile, Roger and Mark receive a call from their former friend and roommate Benjamin "Benny" Coffin III. Benny bought Mark and Roger's apartment building, as well as the lot next door after marrying into a wealthy family. He has plans to evict the homeless from the lot and build a Cyber Studio in its stead. He tells them last year's rent is due and the electrical power goes out. Meanwhile, a drag queen named Angel Dumott Schunard finds Collins on the street and gets him on his feet. The two are immediately attracted to each other, and learn that they are both HIV positive.
Mark tries to get Roger out of the apartment. Mark reveals that Roger has been living in withdrawal for the past year due to his girlfriend April's suicide after discovering they both had HIV. Roger attempts to write a great song to make his mark on the world before he dies. Their downstairs neighbor, an exotic dancer named Mimi Marquéz walks in and flirts with him, although Roger is reluctant to begin a new relationship.
Angel, now in drag, and Collins arrive at the apartment bearing gifts. Collins introduces Angel to his friends and Angel tells how he earned $1,000 by causing a noisy Akita to jump to its death. Benny arrives with an offer: if they convince Maureen to cancel her protest, he'll let them live in his new studio project, rent-free. However, the two rebuff his offer. After Benny leaves, Angel and Collins invite Mark and Roger to attend a local HIV support group meeting.
Mark hurries off to help fix Maureen's sound equipment for the protest, only to run into Maureen's new girlfriend Joanne. They overcome the awkwardness of their meeting and connect over their feelings for Maureen. Mark then enters into the support group meeting. Meanwhile, Mimi attempts to seduce Roger but Roger harshly rebuffs her. Roger intercepts Mimi and apologizes for his behavior. He invites her to come to the protest and dinner with them.
Maureen arrives and begins her performance and protest. Shortly after, a fight breaks out between the protesters and the police. At the Life Café after the show, Benny criticizes the protest and the group's Bohemian lifestyle. Mark and all the bohemians in the café rise up and celebrate the Bohemian lifestyle. Benny tries to plant doubts in Mimi's mind about Roger. Mimi confronts Roger about ignoring her during dinner. Then, as Mimi's beeper goes off she and Roger each discover that the other is HIV-positive and decide to move forward with their relationship. Joanne returns, explaining that Mark and Roger's building has been padlocked and a riot has broken out.
Having been locked out of their apartment by Benny; Mark, Roger, and the others gather to break-in. Mark who had filmed the riot made the nightly news, and that he has a job offer from a tabloid news program.
The others finally break through the door just as Benny arrives. He says he's there to call a truce. He reveals that Mimi, a former girlfriend of his, convinced him to change his mind by making sexual advances on him. Mimi denies seducing Benny, but the revelation that they had once been together upsets Roger. Roger and Mimi both apologize, but Mimi remains upset, and turns to the drug dealer for a fix.
Maureen and Joanne have a fight, giving each other relationship ultimatums. Maureen's flirtatious ways and Joanne's controlling behavior are too much for the other to take, so they break up. By spring, Roger and Mimi's relationship has become strained. Roger keeps talking about moving out of town. Mimi comes home late again, causing…