As Gotham City approaches its bicentennial, Mayor Borg orders district attorney Harvey Dent and police commissioner James Gordon to make the city safer so he can please a respected businessman named Carl Grissom (Jack Palace) since Grissom sponsors his political party. Unknown to Borg however, Grissom is secretly a powerful crime lord who runs Gotham City with his second-in command Jack Napier. Meanwhile, reporter Alexander Knox and photojournalist Vicki Vale begin to investigate rumors of a vigilante nicknamed "Batman", who is targeting the city's criminals. During a party, Bruce is introduced to Vicki Vale (Kim Basinger) when she and Knox try to speak with Gordon. Bruce takes a liking to Vicki and manages to ask her out on a date before he is summoned by Alfred, who reveals to him that there is trouble at the local Axis Chemical Factory which is why Gordon had to leave unexpectedly. Grisson has learned, to his shock, that his own mistress, Alicia Hunt, is having an affair with Napier. He sends Napier to raid the factory but then sends the corrupt detective Arnold Flass (Max Hootkins) to kill Napier. Gordon, also at Bruce Wayne's party, learns of the trouble and heads after Flass. Napier tries to shoot Gordon only Batman to stop him. Batman is about to turn Napier over to the police, Napier's best friend and partner in crime Bob Hawkins threatens to shoot Gordon unless he releases Napier. Batman does and Napier leaves Axis Chemicals. Bob then keeps his word and leaves Gordon alive. Gordon gets angered that Napier got away and takes it out on Batman by ordering him arrested, by Batman is able to escape.
At a video game company, software designer Edward Nygma returns to his office and finds it locked and his name on the door gone. His boss, Carl Grissom, smugly informs him that he has been fired since Nygma sued him for royalties to the computer game he designed called "Riddle of the Minotaur". Nygma protests, saying that the company, Competitron, is now making millions from his game. Grissom dismisses this, and reveals that quite a while ago, he tricked Nygma into signing a contract that did not give him any royalties or copyrights to the game, in order to secure the vast fortune for himself. Outraged, Nygma challenges that Grissom's greed is no match for his genius, to which Grissom responds: "If you're so smart, why aren't you rich?". Nygma leaves in anger and goes to his apartment only to be shocked to face his old friend Napier, who wants to hide out from Grissom. Realizing that they have a common enemy, Nygma offers an alliance with Napier and convinces him to become a criminal known as the Joker by putting on clown makeup.
Later a mobster named Rupert Thorne goes to Gotham City Hall to file an affidavit stating Grissom had given Thorne all his businesses, exiting City Hall surrounded by over-muscled bodyguards and a lawyer. In answer to reporters' questions, Thorne stated that Grissom had asked him, as a personal favor, to take over his operations until Grissom returned. Thorne's lawyer confirmed this, telling the press Grissom's signature was perfectly legitimate. Napier, now calling himself the Joker, and his mimes suddenly pushed their way to Thorne. Joker explained that he had watched Grissom's dead hand sign the statement with his own blood with a certain quill pen. Joker then pulled out a ridiculously large quill pen that must have been four feet long, and then ripped off his hat, showing a horrified Thorne the green hair underneath. Joker presented himself as Vinnie's "Uncle Bingo", then hurled the steel-tipped pen directly at Thorne. Thorne then fell, holding at the unlikely weapon that had sliced through his throat. Thorne's lawyer and his men then fled with the screaming crowd, as The Joker's mimes opened fire with machine guns taken out of their satchels. Bruce gets shocked realizing that the Joker is actually since he recognizes his voice and Vicki gets concerned for Bruce since she has been following him to Crime Alley.
Grissom is negotiating to sell Competitron to Wayne Enterprises for a lucrative buyout. Bruce questions Grissom about what happened with Rupert Thorne and Grissom explains that Thorne's been after him for refusing to pay protection rackets for his businesses. The negotiations are interrupted when Mockridge catches sight out the window of a stock update screen, which someone has tampered with to send him a riddle that says: I am the beginning of the Earth and the end of Time, what am I?" Grissom and Bruce look at it, but Grissom gets confused to what it means, but Bruce deduces that the answer is E which startles Grissom. Meanwhile Alicia returns to her apartment only to see Napier having a martini while being dressed as the Joker. Alicia the faints on the floor.
Back at the hideout, the Joker's looking at the photo of a little girl which is his sister, The Riddler took the photo and made a plan with the Joker by using the chemicals to make SmileX. Meanwhile Professor Kirk Langstrom gets kidnapped by Joker, and Riddler, to perfect SmileX. But then Langstrom refuses and calls the GCPD where he is. Soon Riddler, and Joker flee after planting an bomb blowing up the building. Meanwhile Bruce is confused about the whole E thing. Then he discovers something that E is the first letter of the name of a former employee of Competitron Edward Nygma.
Meanwhile Joker falls for Vicki and kidnaps her so she can take photos of when Mayor Borg is revealing a statue of John T. Gotham. Batman arrives and manages to takeout the Joker and his gang, however Borg ends up going insane in the process causing Deputy Mayor Hamilton Hill to become Acting Mayor Hamilton Hill.
Riddler attacks the bat cave and destroys it while the Joker kidnaps Vicki. Alfred manages with shoot the Riddler and before the Riddler dies, he smiles and gives Alfred a riddle inviting Bruce to "The Wasteland". Bruce gets injured by Alfred but he recovers after he gets amnesia. Bruce realizes the Wasteland is the name of both a location within the game which is a dead end, and a nightclub in Gotham that Grissom owns.
Joker forcibly takes Vicki to a ball at a night club owned by Grissom and attended by the city's elite, including Alexander Knox. Upon arrival, Joker mocked Grissom about Alicia by showing him her mask and announcing she threw herself out the window when Joker put makeup on her causing Alicia to think it was real. Grissom gets angered by it and tries to kill Joker only to end up getting killed. Batman sneaks into the building and gets Knox to help him get the hostages out. Batman manages to fight off the Joker's goons while Joker is dancing with Vicki. Batman horrifies the Joker by acting crazy once he reveals himself as Bruce Wayne and the Joker hardly finds it to be hilarious. Joker attempts to escape on his helicopter, but Batman summons a bunch of bats to attack the Joker causing him to fall to his death.
Commissioner Gordon announces that the police have arrested the Joker's men and unveils the Bat-Signal. Harvey Dent reads a note from Batman, promising that he will defend Gotham whenever crime strikes again. Vicki is taken to Wayne Manor by Alfred, who tells her that Bruce will be a little late. She responds by claiming that she is not a bit surprised, as Batman looks at the bat-signal, standing watch over the city.
- Michael Keaton as Batman / Bruce Wayne
- Jack Nicholson as The Joker / Jack Napier
- Kim Basinger as Vicki Vale
- Robert Wuhl as Alexander Knox
- Pat Hingle as Commissioner Gordon
- Billy Dee Williams as Harvey Dent
- Michael Gough as Alfred Pennyworth
- Jack Palance as Carl Grissom
- Jerry Hall as Alicia Hunt
- Tracey Walter as Bob the Goon
- Lee Wallace as Mayor Borg
- William Hootkins as Lt. Max Eckhardt
- Hugo E. Blick as Young Jack Napier
- Charles Roskilly as Young Bruce Wayne
- Adam West as Thomas Wayne
- Sharon Holm as Martha Wayne
- Garrick Hagon as Tourist Dad
- Liza Ross as Tourist Mom
- Adrian Meyers as Tourist Son
- Robin Williams as The Riddler/Edward Nygma
- ? as Dr. Kirk Langstrom
- Micheal Murphy as Acting Mayor Hamilton Hill