The film opens in the middle of the Arizona desert, with a guy named "Nick the Dick" illegally bringing foreigners into the United States. He is stopped at a Border Patrol checkpoint, where he tries to claim that he was fishing, but the officers insist on looking at his catch.
They find the immigrants and instruct them to form a line. When Nick is about to be arrested, a black car driven by Agent K (Tommy Lee Jones) with Agent D (Richard Hamilton) as a passenger pulls up, and they get out of the car claiming to be from the INS, division six.
They search the foreigners and they find one that does not understand a word of Spanish. They send the rest of them back into Nick's truck and they take the one who doesn't understand Spanish further out to the desert, where Agent K cuts into the foreigner with a knife, revealing that it is a space alien; Mikey.
They arrest Mikey, not knowing when he was let out of jail, when one of the agents, Janus, notices this. Mikey notices Janus, pushes Dee down, and starts running toward him. Kay tells Dee to shoot, but Dee is unable to, so Kay shoots, disintegrating it just in the nick of time.
Janus's colleagues show up and draw their guns on Kay, who insists that the situation is under control. A containment crew shows up and on Kay's orders scorches the nearby landscape while Kay shows the INS agents a device called a Neuralyzer. When Janus asks Kay who he really is, Kay says he is just a figment of their imagination, and zaps the Neuralyzer, which emits a small camera flash.
Kay then takes off his protective sunglasses and tells the agents that they're lucky to be alive after such a big blast, using the cover story of an underground gas main going up after Janus discharged his gun. Dee apologizes for not shooting at Mikey, and since he is getting too old, is neuralyzed by K.
The scene cuts to a New York City street, where a young NYPD officer named James Darrell Edwards III (later Agent J, played by Will Smith) chases after a man who he does not know is a Cephalapoid. Edwards almost catches the man, but he gets away by drawing a weapon that evaporates.
He runs once again and Edwards finally catches him on the roof of a building. The man claims "he's coming" and that the world will end. He blinks gills under his eyes, and then he willingly falls to his death. The seen cuts to a farm, where a grumpy farmer named Edgar (Vincent D'Onofrio) yells at his wife about his dinner being poorly made instead of having a steak, saying that she is useless, and the only thing that pulls its weight is his truck.
On cue, a spaceship promptly crashes into the truck, destroying it and creating a crater. Edgar goes outside to investigate, and he is killed by the alien. The alien steals his skin and uses it as a disguise, and then goes back into the house. He asks for sugar water, and then freaks Edgar's wife, Beatrice out so he can get away.
He goes outside and picks his spaceship up, since he must take it with him to return home. Meanwhile, Edwards gives his incident report to his boss, and when he leaves, Kay steps in and asks Edwards about the weapon that evaporated. He asks if Edwards would recognize the weapon if seen again.
He takes Edwards to Jack Jeebs' pawn shop, and after a little persuasion, which involves Kay blowing off Jeebs' head (Jeebs then regrows a new head), Jeebs shows them the guns and Edwards picks out the one he saw. Kay yells at Jeebs, thinking that the weapon was used for an assassination attempt, and that the alien who bought it was unlicensed.
Kay neuralyzes Edwards and then decides that he should join the company he really works for, the Men in Black. He gives Edwards the card. Along with some other government agents, Edwards gets his training. First is a written exam, where Edwards, unable to write in the chair, drags a table over.
Next is a target range, where the recruits grab pistols and shoot at cardboard cut-outs of extraterrestrials. All of the recruits fire at every target that passes by, except for Edwards, who waits, and then fires a single round. The MIB chief Zed (Rip Torn) asks Edwards why he thought his target, a cardboard cutout of a small girl, "Little Tiffany", deserved to die.
Edwards explains that one target hanging from a lamppost is just working out, another target who was snarling has a tissue in his hand (indicating that he was sneezing), and the target Edwards shot was an eight-year old girl reading quantum physics books. Zed and Kay debate the results, and decide that Edwards is the right candidate.
Kay pulls Edwards aside while Zed neuralyzes the rejected recruits (under the pretense of an eye examination). K introduces Edwards to the Worms, who are in the coffee room, and then tells him that humans are not alone on the planet, and that aliens live among humans in secret.
At another rural farm, the Bug (in Edgar's skin) kills an exterminator by forcing his own gas pipe down his mouth, and steals his truck to house his ship in. Kay gives Edwards until sunrise to think about joining MIB, and Edwards accepts. All of Edwards' identifying marks are erased, and he is renamed J, the newest MIB recruit. Edgar, in the meantime, follows an alien named Gentle Rosenburg in the exterminator's truck.
J is given his first assignment with K to follow Reggie Redgick, an extraterrestrial in New Jersey despite the fact that he is restricted to the New York City area.
Redgick is in a rush to get off the planet with his wife, even though they have a newborn baby. K finds this unusual, and decides to check out the news to see if anything has happened. He sees an article written by Edgar's wife, "alien stole my husband's skin," and goes to investigate with J.
Meanwhile, Edgar follows Rosenburg to meet with another alien of the same race, who informs him that a bug landed on the planet and that he must get away. Edgar kills both aliens, and takes a possesion of theirs, believing it to be the Galaxy, which is a source of power the size of a marble. K and J pose as FBI agents and question the wife.
They learn about the sugar water, and once they have all the information they need, she is neuralyzed. J convinces K to ad lib the memory she gets, and J extends it. K analyzes the dirt that the alien may have left a spectral trail on, and discovers that they are after a Bug. He tells J that they will watch the morgues with the bug in town. A mortician, Laurel Weaver (Linda Fiorentino), examines the bodies and finds them unusual.
J and K pose as doctors, they examine the bodies, and they discover that Rosenburg isn't really dead yet. His last words are "to prevent war, the Galaxy is on Orion's Belt." K neuralyzes Weaver, and they head back to headquarters. Edgar is banging the possesion, but it spills jewels form Rosenburg's jewelry store, and it is not the Galaxy that he is looking for.
He resumes his search, while J and K look at Orion's belt, but Zed thinks that they heard wrong. They then discover that a bunch of aliens have left the planet, and they notice an Arquilian (Rosenburg's race) battleship above the earth conveying a message. K and J go down to Rosenburg's jewelry store to find more clues, and Zed tells K to give J a weapon.
K gives J the "Noisy Cricket", and because of its size, J doesn't think it will protect him. Edgar gets to Rosenburg's before J & K do, however, and he breaks in to look for the Galaxy. He sees a picture of Rosenburg's cat, who was by his side at the time of his death. Edgar sees a marble on the cat's collar, which he thinks is the Galaxy. He notices the exterminator's truck being towed, and goes out to investigate.
K & J arrive with their weapons, notice the havoc that has been wreaked upon the store, and J finds it unusual that anyone has broken in without taking any jewels. They suspect that the bug is behind it. They hear a shot, and they see Edgar walking with a gun in his hand. Edgar gets in the tow truck, drives away, and J fires the noisy cricket, which is, to his surprise, extremely powerful.
He fires the gun two more times, when K tells him not to shoot in front of witnesses. K asks Zed for a Containment Crew, and he is told that the Arquillians want the Galaxy. Edgar, in the meantime, asks a man "Where do you keep your dead?" and eventually gets "city morgue" out of him. Edgar steals some postcards, then proceeds for the morgue.
K and J talk to an alien dog named Frank and they are told that the Galaxy is on Earth, and that it's tiny. J and K are confused, but when they see Frank bark at a cat they know where to find the Galaxy. Edgar goes into the morgue and threatens Weaver for the cat (its name was Orion). J enters the morgue, and then discovers that Weaver is being held hostage by Edgar, and that Edgar beat the MIB to the punch.
He escapes with Weaver and tells her to take him to the World's Fair, where there are working flying saucers. K tells J not to worry about him, since they have his ship he can't get off the planet. The Arquillians fire a warning shot and say that they will go to war in an hour. J thinks that the bug is going to leave the planet via the flying saucers at the World's Fair, since all the other transports off the planet have left.
Edgar arrives at the fair before Jay and Kay, who are driving through the Queens-Midtown Tunnel and manage to zip past the traffic by pressing a red button that allows the car to not only activate the auxiliary mode, but to drive on the roof of the tunnel, and he eats the Galaxy that he got off Orion's collar. Edgar drags Weaver with him while getting into a saucer, and J & K arrive just in time to save her.
They shoot down the flying saucer Edgar takes off in, and he gets out. The bug takes Edgar's skin off, revealing his true form. He eats their guns. K attempts the bug to eat him to get the guns back, and tells J to not let him get on the second ship and create a distraction for the bug. J begins fighting with the bug by stepping on cockroaches, and K shoots his way out of the bug's digestive system after he has found his gun, splitting the alien in half.
They get the Galaxy back and deliver it to the Arquillians. While J and K are recovering from their battle, the top half of him is still alive, but Weaver shoots the alien by using J's gun which was dragged out of it's stomach. As MIB cleans up the situation, K tells J to neuralyze him, since he wasn't training a partner, but rather a replacement. J accepts and K is neuralyzed, and Weaver joins the MIB as Agent L