When once-wealthy string magnate Rudolf Smuntz (William Hickey) dies, he leaves his outdated string factory and a run-down mansion to his two sons, Lars (Lee Evans) and Ernie (Nathan Lane). When Lars declines an offer by representatives from the large Zeppco conglomerate to buy their string factory, his greedy wife April (Vicki Lewis) promptly throws him out and ran off with a wealthy magician. Meanwhile, Ernie serves Mayor McKrinkle (Cliff Emmich) at his restaurant in anticipation of becoming a famous chef for serving such a high-profile guest, only for the mayor to accidentally consume a cockroach and die from a resulting heart attack in concerns of his twin daughters Becky and Betty. As a result, Ernie loses both his house and his job.
Both homeless and jobless, Ernie and Lars are forced to live in the mansion together. Finding blueprints of the mansion, they discover that it is a lost masterpiece designed by famous architect Charles Lyle LaRue. Alexander Falko (Maury Chaykin), a wealthy LaRue collector makes an offer, but Ernie declines under the belief they can make a larger profit by restoration and auction. However, the brothers have already realized that the house has an occupant: a tiny and treacherous mouse. Fearing a repeat cockroach incident, Ernie decides that they need to get rid of the rodent. Despite attempting a wide array of methods, including numerous mousetraps and a vacuum cleaner, they fail. To make their situation worse, Ernie borrows $1,200 against the house mortgage to buy a jacuzzi tub (which is lost to the bottom of a nearby lake), and the bank threatens to foreclose on the house in two days unless they reimburse the money. The brothers purchase a monstrous cat to deal with the mouse while they set out to find a way to pay the mortgage, but the cat is killed when the mouse sends it on a one-way trip down the dumbwaiter. They then hire an eccentric exterminator named Caesar (Christopher Walken) to handle the mouse, though he too is outsmarted.
Meanwhile, Lars attempts to raise the money by withholding the salaries of the string factory's employees. The angry employees instead go on strike, and Lars's attempt to run the factory himself ends in disaster. Elsewhere, Ernie discovers documents about the offer for his late-father's factory and attempts a rendezvous with the Zeppco representatives. However, distracted by two attractive Belgian hair-models named Hilde (Camilla Søeberg) and Ingrid (Debra Christofferson) while he is waiting, he is struck by a bus and rushed to a hospital, missing his appointment. Lars later meets Ernie in the hospital and explains that April, now aware of Lars' possible auction profits (and having made love with him upon finding out), has agreed to pay the mortgage off.
Upon returning home to find a delirious Caesar being carted away by paramedics, the brothers resume their task to kill the mouse with renewed obsession. When Ernie chases the mouse up a chimney and gets stuck, Lars tries to light a match while the mouse starts a gas leak, creating a terrible explosion that blasts Ernie out of the chimney and into the lake. In rage, Ernie grabs a gun and fires it at the mouse, accidentally shooting a compressed can of pesticide left by Caesar that explodes and causes enormous damage to the property.
As the brothers recover from the blast, Zeppco calls and leaves an answering machine message, stating that they have withdrawn their offer to buy the factory. Now angry at each other for all the lies and deception, the brothers start arguing and Lars starts throwing fruit, but accidentally hits the mouse and knocks it unconscious. Unable to finish it off, they instead seal the mouse in a box and mail it to Fidel Castro in Cuba. With the mouse seemingly gone and with April having paid off the mortgage, the brothers reconcile again and finish renovating the house.
The night of the auction finally arrives, which is attended by Falko, April, Hilde and Ingrid, and a wide variety of international multi-millionaires. Falko attempts to get Ernie to call off the auction with a sizable offer, but Ernie declines and the auction soon begins. However, Lars discovers the mouse's box in the snow outside, returned due to insufficient postage and with a big hole gnawed through it. Lars and Ernie panic upon seeing the mouse return, but attempt to maintain their composure as the auction continues. When the mouse's antics starts sparking panic and riot in the guests, the brothers desperately attempt to flush out the mouse by feeding a hosepipe into the wall. As the auction reaches a record $25 million bid, the house rapidly floods through the walls and finally the floors, and all the people are washed out of the house as it promptly collapses. Watching as April and all the bidders leave in disgust, the brothers' only consolation is the fact that the mouse must finally be dead.
With nowhere else to go, the brothers return to the factory and fall asleep, with only a single chunk of cheese for food. The mouse, having followed the brothers, restarts and feeds the cheese into the machinery to make a ball of string cheese, which inspires Ernie and Lars. In the final scene, Ernie and Lars end their war with the mouse and have successfully rebuilt the factory as a novelty string cheese company. Lars has begun a relationship with Hilde, Ernie is able to put his culinary skill to work in developing new cheese flavors, the mouse has become his personal taste-tester, and their father's spirit is finally pleased.