Jerry Lundegaard (William H. Macy) is a car salesman in Minneapolis who has gotten himself into debt and is so desperate for money that he hires two thugs (Steve Buscemi and Peter Stormare) to kidnap his own wife. Jerry will collect the ransom from her wealthy father (Harve Presnell), paying the thugs a small portion and keeping the rest to satisfy his debts.

The scheme collapses when the thugs shoot a state trooper and two innocent bystanders in rural Minnesota, drawing local Police Chief Marge Gunderson (Frances McDormand) into her first homicide investigation. At first unaware that the homicides are connected to a Minneapolis kidnapping, Chief Gunderson draws closer to Jerry Lundegaard as his situation further unravels.