One night Batman goes to visit the Joker in Arkham Asylum. While contemplating the futility of their relationship, and that it will only result in either his or the Joker's death in the future, he discovers that the Joker sitting before him is not actually the Joker, but an impostor.

Meanwhile, the Joker is looking to buy a run-down old theme park for unknown reasons. Through flashbacks, Moore reveals parts of the Joker's past, and shows he had a significant other named Jeannie who was pregnant with his child. Joker kills the owner of the theme park and makes it his own. Later, Barbara Gordon answers the door only to find the Joker on the other side. the Joker shoots Barbara and takes nude photos of her on the floor and bleeding. His goons abduct Commissioner Gordon. In another flashback we see that the Joker was a failed comedian who, out of desperation for the life of his unborn baby, joins the mob for one job and becomes the Red Hood.

Commissioner Gordon is stripped naked and sent through an insane carnival ride, bombarded with the nude images of his daughter in an attempt to to break his sanity. Another flash back shows that before the Joker could even begin the job, Jeannie had died. Distraught, he has doubts about the job, but gets bullied into it anyway. When Batman ruins the job, the Joker accidentally falls into a vat of chemical altering his appearance. Back in the present, after gathering clues, Batman finds his way to the carnival and proceeds to fight Joker and free Gordon. Joker tries to shoot Batman, but his gun turns out to be a joke gun. The Joker tells a feeble joke and they both start laughing. The story ends as it starts pouring rain.

Barbara is revealed to be paralysed from the waist down. It is then she decides to become the omniscient computer presence known as the Oracle.