The Dude is enjoying a peaceable life of bowling, Bob Dylan, and White Russians in L.A. when his world is rocked by a pair of toughs who break into his apartment and demand he "pay up." They call The Dude by his birth name, Jeff Lebowski, and tell him that his wife owes Jackie Treehorn money, which means he owes Jackie Treehorn money. Then, they pee on his prized rug.
The Dude is not happy. That rug really tied the room together.
Since The Dude has no wife and is not known to anyone as Jeff Lebowski, he realizes this must be a case of mistaken identity. He finds the other Jeff Lebowski the toughs were looking for—a guy unofficially known as the Big Lebowski, a multimillionaire who has little pity for the fact that The Dude's rug was peed on and no interest in paying for the damage. The Dude ends up liberating a rug from the Big Lebowski's mansion and calling it a day. On the way out, he's propositioned by Lebowski's hot, young (ahem, very young) trophy wife, Bunny, who's sunning herself at the pool and polishing her toenails a bright green. Classy.
A week later, the Big Lebowski calls The Dude with some urgent news: Bunny has been kidnapped. He believes The Dude is the only one who can deliver her million-dollar ransom. And The Dude tries to, but his friend Walter gets involved and gives the kidnappers a "ringer" briefcase full of his dirty undies. The briefcase with the $1 million remains in The Dude's car.
Nothing bad can happen, right?
The Dude, Walter, and Donny bowl a few frames, and then they decide to call it quits. The Dude goes outside to find that his car has been stolen with the briefcase inside. He then goes home, where Maude Lebowski (daughter of Big) knocks him out cold and takes back the rug he took from Big's mansion. Later, his home is invaded by a group of German nihilists who identify themselves as Bunny Lebowski's kidnappers and demand money from him. Clearly, The Dude is getting dragged into some complicated scheme he wants no part of.
Eventually, Maude gets The Dude back to her apartment, where she explains that Bunny Lebowski is a former porn star who used to work for Jackie Treehorn, and that the German nihilists are actually good friends of Bunny's. The whole kidnapping thing is a sham. The Dude is forcibly brought before Jackie Treehorn himself, who demands to know the whereabouts of Bunny and the money she owes him. The Dude tries to answer, but Jackie Treehorn drugs The Dude's White Russian. When The Dude wakes up after a wicked psychedelic dream, he's being reamed out by the chief of police, who tells The Dude to get out of Malibu and stay out.
When The Dude finally gets back to his apartment, he finds it's been completely ransacked. Maude is standing in the middle of all the clutter wearing nothing but The Dude's bathrobe and demands sex.
Afterward, Maude reveals that she's trying to get pregnant. Naturally, The Dude freaks out, but Maude explains that she wants the father to be completely out of the picture. She then explains that her mother, not the Big Lebowski, was the one with the money; she left her money exclusively to the family charity, and the Big Lebowski can't even manage managing that.
The German nihilists haven't given up, though. They set The Dude's car on fire and threaten to attack him if he doesn't pay up. The Dude informs them that there was no kidnapping, but they don't care—they still want money. In all of the excitement, Donny keels over from a heart attack. Walter and The Dude collect his ashes and try to scatter them in the Pacific, but most of them end up on The Dude. Win for physical comedy, anyone?
Eventually, everything comes together for The Dude. He and Walter go to the Lebowski mansion, where Bunny is safe and sound; it turns out she was just away for the week visiting friends and didn't tell anyone. The Dude confronts the Big Lebowski with the truth: he didn't really want Bunny back. He's broke, so he stole money from the charity for himself, claiming Bunny was kidnapped and he was paying her ransom. There was no money in the briefcase to begin with. The German nihilists used the supposed kidnapping to try and extort money from the Big Lebowski.
Walter and The Dude go back to the bowling alley, where the cowboy reflects on the meaning of life—and the quality of this movie.