The movie was among the top ten moneymakers of its year, cemented Carrey's reputation as one of the dominant comedic actors of the era, and established Diaz as a major starlet immediately, who would go on to have a long career as a leading lady. Carrey was nominated for a Golden Globe for his role, and the film was nominated for the Academy Award for Best Visual Effects, but lost to Forrest Gump.
Shy and luckless clerk Stanley Ipkiss works at an Edge City bank. He is bullied by nearly everyone he is around including his boss Mr. Dickey and his land-lady Mrs. Peenman. His only friends are his Jack Russell Terrier Milo and his co-worker Charlie Schumaker. Meanwhile, gangster Dorian Tyrell operates a nightclub called the Coco Bongo while plotting to overthrow his boss Niko. Tyrell sends his singer girlfriend Tina Carlyle into Stanley's bank to record its layout, in preparation to rob the bank.
Stanley is attracted to Tina, and she seems to reciprocate. After being denied entrance to the Coco Bongo, near the city's harbor, he finds a mysterious wooden mask. Placing it on his face transforms him into a zoot-suited, green-faced, bizarre trickster known as the Mask, who is able to cartoonishly alter himself and his surroundings at will. The transformed Stanley exacts revenge on some of his tormentors, including the auto mechanics who ripped him off the night before, and scares a street gang that attempts to rob him by turning a balloon into a Tommy gun.
The next morning, Stanley encounters detective Lieutenant Kellaway and newspaper reporter Peggy Brandt investigating the Mask's activity. To attend Tina's performance and, despite being sought by the police, he again becomes the Mask in order to steal money targeted by Tyrell. At the Coco Bongo, the Mask dances exuberantly with Tina, whom he ends up kissing. Following a confrontation with Tyrell, the Mask flees, leaving behind a scrap of cloth belonging to himself.
Kellaway accuses Stanley of the bank-robbery, but he escapes trouble and later consults an expert on masks named Arthur Neuman, who tells him that the object is a depiction of Loki, the Norse god of darkness and mischief. Despite this and with both Tyrell and Kellaway hunting for him, a more confident Stanley stands up to his boss and arranges for Tina to meet the Mask at the local Landfill Park. The meeting is proceeding as planned when Lt. Kellaway attempts to arrest him. The Mask tricks a large group of Edge City police officers into joining him in a mass-performance of the Desi Arnaz song "Cuban Pete". Stanley flees with Peggy, but he is betrayed to Tyrell for a $50,000 bounty. Tyrell tries on the mask and becomes a malevolent green-faced being. Forced to reveal the location of the stolen money, Stanley is kept hostage in one of the mob's cars while Tyrell's henchmen reclaim the money. Stanley is later given to Kellaway along with a rubber green mask to be detained.
When Tina visits Stanley in his cell, he urges her to flee the city. Tina thanks Stanley for treating her with respect and tells him that she knew that he was the Mask all along. She attempts to leave the city, but is captured by Orlando and Tyrell and taken to a charity ball hosted by Niko and attended by the city's elite, including the city's mayor Mitchell Tilton. Upon arrival, the masked Tyrell kills Niko, and prepares to destroy both the club and Tina. Milo helps Stanley escape prison, and they, bringing Kellaway as a cover and hostage, go to stop Tyrell.
After the brief, initial success of securing the assistance of Charlie, Stanley is spotted by Orlando and captured. Tina tricks Tyrell into taking off the mask, which is recovered and donned by Milo, turning the dog into a cartoonish pitbull who defeats Tyrell's men, while Stanley fights Tyrell. Stanley then recovers the mask and uses its abilities to save Tina by swallowing Tyrell's bomb and flushing Tyrell down the drain of the club's ornamental fountain. The police arrive and arrest Tyrell's remaining henchmen while Kellaway arrests Stanley again, then Tilton announces to everyone that Tyrell was The Mask the whole time, as a way for Kellaway to let Stanley go. Tilton tells Stanley that he is a hero, and thanks him for saving lives. He goes on to say that he needs to have a meeting with Kellaway in his office the next morning, and all charges against Stanley are dropped.
As the sun rises the following day, Stanley, Tina, Milo, and Charlie take the mask back down to the harbor, where Tina throws it into the water and she and Stanley begin to kiss before Stanley can end the film by saying in the mask's voice, "Smoking." and kiss again. Charlie attempts to retrieve the mask for himself, only to find Milo swimming away with it.