A wealthy couple living in New York City, Royal and Etheline Tenenbaum, separate. Their three children, Richie, Chas, and Margo are all precociously gifted. Richie is an exceptional tennis player, Margot (their adopted daughter) is an established playwright, and Chas is a prodigy of business and science. Having been disbarred from practicing law, Royal moves to a hotel, where he lives for the next 22 years, paying hardly any attention to his family.
The Tenenbaum children grow up, sad shadows of the prodigies they once were. After his wife dies tragically in a plane crash, Chas becomes irrationally paranoid about safety, and worries that his two sons, Ari and Uzi, will be taken from him prematurely. Margot hasn't had a play produced in 7 years, and is in a seemingly loveless marriage with Raleigh St. Clair, a neurologist. Richie, after a devastating loss on the tennis courts, has been living on a boat in the middle of the ocean. Meanwhile, Etheline still lives in the Tenenbaum residence, has become an archaeologist, and has recently been proposed to by her accountant, Henry Sherman. Pagoda, the family butler, tells Royal about the proposal. As Royal is being kicked out of his hotel residence, and is jealous about Etheline's other suitor, he plans to ingratiate himself back into his family members' lives.
Royal lies to Etheline and tells her that he has terminal stomach cancer in order to get her to let him move back into the house. All of the children move back home. Richie returns home from his cruise, seemingly the most sympathetic to his father's illness, but Margot and Chas seem to want nothing to do with him. Royal establishes a relationship with his grandsons, showing them how to live on the edge and enjoy life. Tensions between Henry Sherman and Royal rise, as Royal actively tries to provoke his wife's betrothed. Eventually, Henry reveals that Royal is lying about his illness and Etheline and the children throw him out of the house.
Raleigh St. Clair becomes paranoid that Margot is having an affair and hires a private investigator. The investigator reveals to Richie and Raleigh that Margot has had numerous affairs over the years, most recently with Richie's best friend and mid-level novelist, Eli Cash. Richie has long been in love with his adopted sister, and when he hears the news, he attempts suicide, but is rushed to the hospital just in time. Richie and Margot profess their love for one another.
On the day of Etheline's marriage to Henry, Eli Cash—while high on drugs—drives his car into the side of the Tenenbaum residence, killing Ari and Uzi's dog. Chas chases Eli through the house and they fight. After a chaotic chase scene, everyone makes up and forgives one another. Soon after, Royal dies.
