The movie begins in an alley at Gotham City where two thugs are being attacked by a mysterious figure dressed up as a bat. One thug begs not to be killed, but the figure tells him that he has no intention to kill him. When he asks who he is, the figure replies that he is Batman.
In the night, the mayor makes a speech of how Gotham is corrupt by the hands of crime boss, Carl Grissom, and because of that, the cops have became corrupt as well. A man named Jack Napier is watching this with Alicia, his boss' mistress. She is worried that they'll be in trouble if Grissom found out about them being together. Napier then leaves afterwards.
A reporter named Alex Knox is trying to interview a corrupt cop named Lt. Eckhart, but fails. Just then, the latter is confronted by Napier, who reminds him that his problems are their problems. Eckhart remarks that he'll only take orders from Grissom, not to psychos. When Eckhart insults him about being an A-1 boy, Napier pushes him to a wall and has his henchman, Bob, to put him at gunpoint in order to convince him.
Meanwhile, Knox is talking with reporter Vicky Vale about Batman.
At the same time, Grissom is upset about how Harvey Dent has a connection to him with Axis Chemicals. When Napier says about going there, Grissom orders him to go to Axis Chemicals. After the meeting, Napier complains about he doesn't want to go there, and Grissom tells him that he needs someone he can trust and that, Napier is his number 1 guy. When Napier leaves, Grissom goes to the phone to call Eckhart.
In Wayne Manor, a party occurs. Vicky asks a man for Bruce Wayne, but he states that he doesn't know him. Knox is interviewing Commissioner Gordon and the mayor. The former is told by a policeman that Napier is cleaning up Axis Chemicals and that Eckhart didn't tell him about it.
Vicky and Knox go to a place to see armors. They don't know one, and a man states that he bought is from Japan and reveals that he is Bruce Wayne. Just then, his butler, Alfred, calls him about to go somewhere.
Bruce is watching the conversation between Vicky and Knox by camera and gets a conversation between Gordon and a policeman about Napier cleaning up Axis Chemicals.
In Axis Chemicals, Eckhart orders his men to find Napier and kill him. Meanwhile, Napier and his men open a safe to find no papers there. The former realizes that they've been ratted out. Just then, they were attacked by the policemen.
Gordon arrives to tell Eckhart that he is charge of the investigation, not Grissom. He orders the policemen to take Napier alive and the one who will open fire on him will be in trouble. At the same time, Batman arrives and captures one of the criminals.
Napier runs around the plant with Batman following him. He tries to kill Gordon, but Batman grabs him. However, Bob points Gordon at gunpoint in order to get Batman to release Napier. Napier points his gun at Batman, but he escapes. Just then, he finds Eckhart and kills him. Napier fires a shot at Batman, but the latter ricochets the bullet to the former's face, causing him to fall to a vat of chemicals. Batman tries to save him, but Napier falls to the chemicals. Gordon tries to get Batman, but he escapes. In the sewers, Napier's hand emerges from the waters.
Meanwhile, Bruce is having a date with Vicky. At the same time, Grissom is greeted by Napier, who is upset that he betrayed him for being with his mistress. He tries to tell him that they could have a deal, but Napier tells him to call him Joker and reveals his clown-like appearance. He kills Grissom afterwards. Bruce is kissing with Vicky at the stairway. Joker is planning to show himself to Gotham.
In the morning, Vicky leaves. Meanwhile, Alicia is greeted by Joker and is scared that she fainted.
Joker has a meeting with the crime bosses and tells them that he is charge of Grissom's empire. When Rotelli refuses to do such orders from him, Joker electrocutes him to death with his joybuzzer, and his men puts all of the crime bosses at gunpoint. Ricorso remarks that he is crazy for what he did. Joker orders the crime bosses to leave. He orders Bob to find the Batman and calls him to be his number 1 guy. Joker begins insulting Rotelli's corpse that he is glad that he's dead.
Meanwhile, Bruce is putting flowers on a floor. What he didn't know is that Vicky is following him.
At City Hall, Knox interviews about Grissom's death. Just then, Joker shows up and kills Ricorso by stabbing him in the neck with a feather. He orders the mimes to open fire. Vicky tries to warn Bruce, but he is not hurt and looks at Joker as he leaves.
Joker is watching the news and is upset of how Batman gets his presses. Bruce is shocked that Joker is still alive after the incident at Axis Chemicals and wants a profile of him.
Joker is cutting pictures at his table. Just then, Bob shows him photos of Knox and Vicky. Joker begins to fall in love with the latter and orders Bob to get a phone book for her. He dances afterwards.
In the night, Joker orders the scientists at Axis Chemicals to ship his chemical. In the news, one reporter dies after laughing too much. Just then, Joker shows a commercial of his products with the secret ingredient: Smiley. He reveals of how he those products to kill people with a smile just like what happened to the reporter.
Bruce is watching this and Alfred gives him a profile of Jack Napier. It is revealed that he begins to commit crimes as a kid and has knowledge of arts and chemistry. Meanwhile, Joker puts on his makeup and Alicia asks him where they are going. He replies about making art.
In Gotham Art Museum, Vicky is meeting with someone, but after waiting for too long, gets a package to put on a gas mask. Just then, people are knocked out by a gas and Vicky puts on the mask for protection.
Just then, Joker and his men arrive and vandalize the museum before meeting with Vicky. After scaring her by showing Alicia's face being damaged, Joker attempts to kill her by using acid, but she escapes and throws water at his face. When Vicky tries to comfort him, Joker scares her by showing his clown-like face underneath. Just then, Batman arrives and rescues Vicky. He takes on Joker's men and takes Vicky to the Batcave where he makes her asleep.
The next morning, the news announces about what are Joker's products to stay away from. Joker is watching this and plans on having Batman killed.
Bruce goes to Vicky's apartment to tell her the reason why he didn't show up at the Gotham Art Museum. However, Joker and his men arrive. The former is upset that Vicky has run out of him and tells her that bad news: Alicia threw herself out of the window. Just then, Bruce tells Joker a story about a mean kid who is crazy and has his lights out. The latter shoots him, and leaves with his men. Vicky goes to Bruce only to find him gone and that he uses a tray to protect himself. She opens a present from Joker and faints when it shows a hand holding flowers.
Meanwhile, Bruce is looking at the news about the murder of his parents. At the same time, Joker announces of having a parade tonight. Bruce has a flashback that he, as Napier, is responsible for the death of his parents. Vicky arrives to the Batcave and now knows that Bruce Wayne is Batman.
As Batman, he goes to Axis Chemicals and destroys it. However, Joker taunts him that he misses him.
Meanwhile, Joker has drop $20,000,000 to the people and plans to kill them with his gas. However, Batman grabs the balloons and lets them fly away. Joker is complaining of how he could have a vehicle that could let him fly and kills Bob. While his men are causing trouble, Joker orders Batman to shoot him down, but misses the shot, and he shots the latter down.
When Vicky tries to look for Batman, Joker puts her at gunpoint and orders transportation from Gotham Cathedral. Batman emerges from the wrecked vehicle and follows Joker. When getting to the top of the tower, Joker has his men get Batman while he dances with Vicky.
After defeating them, Batman punches Joker and plans to have him killed. The latter states that he can't do that because he made him the way he is after the incident at Axis Chemicals. Batman fights Joker and punches him out of the tower. However, he grabs Batman and Vicky down to the ledge of the tower. Joker tries to have Batman and Vicky fall to their deaths. Just then, a helicopter came and Joker plans to leave the two there. While trying to escape, Batman uses his grapple to attach Joker's foot to a gargoyle. Because of this, Joker falls to his death. Batman saves Vicky from falling.
The police surrounds Joker's corpse and Gordon finds a laughing voice on his pocket.
Gordon gets a letter about how to use the Bat-like signal to call Batman whenever Gotham City is in danger. Vicky looks at the top of a building to find him standing there with the Bat signal activated.
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