Will Bloom is a journalist living in Paris. For most of his life he has been frustrated by his father, Edward, a longwinded and charismatic Southerner, who tells the same tall tales over and over again. Particularly bothersome to Will is Edward's tale of the day of Will's birth, which involves a giant catfish eating Edward's wedding ring. After Edward tells the story at Will's wedding to Will's new wife—a French photographer named Josephine—Will loses his temper and the two remain estranged for the next three years.
One day, Will receives a call and learns that his father is suffering from terminal cancer. He does not have long to live, and so Will and Josephine pack up and go to Ashton, Alabama, Will's hometown. There they are reunited with Sandra, Will's mother, and the bedridden Edward.
In a flashback, Edward and two of his friends meet a witch who lives near a swamp. The witch has a glass eye which reveals the eventual death of whoever looks into it. Edward sees the vision of his death and consequently starts to do some very risky things, because he knows that they are not going to kill him. Soon after, Edward has a particularly dramatic growth spurt, which signals to him that he is destined for bigger things.
When a livestock-eating giant named Karl comes to town, Edward courageously tracks him down and convinces him to leave town with him. Edward and Karl set off into a dark forest, taking different paths through. In the middle of the forest, Edward finds the town of Spectre, a utopian society, cut off from the rest of the world, where no one wears shoes and no one ever leaves.
After spending a day and a night in Spectre, Edward shocks everyone in the town by taking his leave. He set off without his shoes, eventually meeting up again with Karl. The duo comes across a circus, where Karl is immediately hired as a sideshow by proprietor and ringmaster Amos Calloway. When Edward sees a pretty girl in the audience of the circus, he is convinced she is the girl whom he will marry and begs Calloway for a job. In place of financial compensation, Edward agrees to do work for the circus in exchange for a monthly piece of information about the girl he loves. One night, Edward discovers that Amos is a werewolf, and when he returns to his human state, Amos tells Edward the girl's name: Sandra Templeton. Edward immediately goes to Auburn, Sandra's college, to propose.
Edward finds Sandra and tells her that he loves her, but she tells him she is already engaged to Don Prince, another Ashton native. When Edward covers Sandra's lawn with daffodils, Don beats Edward up, and seeing the attack, Sandra breaks off the engagement.
Edward is drafted into the army. Confident he will survive thanks to what he saw in the glass eye, he volunteers for the most dangerous missions so that he might get sent home sooner. Edward is parachuted into an army camp in Asia and meets conjoined twin singers. Edward offers to help them get into show business in America if they can help him get home. Unfortunately, the Army thinks Edward is missing and sends a telegram to Sandra telling her he is dead. Eventually, however, Edward arrives home and takes a job as a traveling salesman after the couple gets married.
One day, as he is in line at the bank, Edward is reunited with the poet Norther Winslow, whom he met in Spectre and who is now a bank robber. When his bank robbing dries up because of the poor Texan economy, Norther heads for Wall Street and ends up sending $10,000 to Edward, which Edward uses to buy a house for his family.
As Edward nears middle age, he re-establishes his friendship with Jenny, a little girl from Spectre, buying back the town, whose economy is failing, and helping to refurbish it. Jenny wants to have an affair, but Edward declines.
In the present day, Edward grows ever weaker. When he suffers a stroke and is hospitalized, Will stays at the hospital with him and talks with the family doctor who delivered him. Will asks about the details of his birth, and learns that the real story is pretty normal and not very compelling. When Edward awakens in the middle of the night, he asks Will to tell him the story of his death, and Will makes up a tall tale that involves Edward turning into a large catfish, while everyone from Edward's past watches. As Will finishes his story, Edward dies.
At Edward's funeral, Will is stunned to see all of the people in Edward's stories in attendance; Karl the giant, Amos Calloway, Norther Winslow, Jenny and the conjoined twins.
