The setting is Hollywood in the late 1940s, with two stories occurring simultaneously: a Hollywood comedy and a detective drama. The real-life scenes are in color and the movie scenes in black and white. Costumes and setting reflect the reality vs. Film.
Alaura Kingsley, a striking socialite, is ushered into detective Stone's office by Oolie, his loyal Girl Friday. Alaura hires him to find her step-daughter Mallory Kingsley, a beautiful "bad" girl, who will later turn up in Stone's office. Stone receives a brutal beating from two thugs and is framed for a murder. As the plot thickens, Stone's own past comes to haunt him. The relatively simple missing daughter case turns complicated and may end up costing Stone his life. It keeps getting more and more complicated, possibly because the author keeps rewriting it.
The author, Stine, is a novelist adapting his novel, City of Angels into a screenplay for movie mogul Buddy Fidler. Buddy, a charismatic and autocratic producer-director, has an immense ego and, although he claims to be a fan of Stine’s work, he continually demands rewrites from the increasingly reluctant Stine. As Stine struggles to keep both his job and his novel's integrity, his wife Gabby disapproves of his womanizing and leaves for New York on a business trip. Shortly afterwards, he begins an affair with Buddy's secretary Donna. Gabby discovers this and leaves him.
When Stine fulfills Buddy's request to remove a racially-motivated plotline from the screenplay, Stone himself grows frustrated with his author's lack of integrity and berates him for it. Creator and creation have an argument, which Stine wins by typing a scene where the detective is beaten up.
Stine flies to New York in an unsuccessful attempt to reconcile with Gabby, earning Buddy's ire. When he returns, he discovers that Buddy has drastically rewritten the film's ending to his own satisfaction and given himself a prominent co-writing credit. Stine appears on set for the first day of filming to confront the unrepentant Fidler and discovers, to his shock, that a popular crooner has been cast as his hard-boiled detective. With Stone himself at his side, Stine rips up the script and quits. He is about to be beaten by two studio guards, when, in a reversal on their earlier confrontation, Stone aids him by typing a scene allowing Stine to defeat the guards and win back both his wife and his self-respect.
Apart from Stine and Stone, the actors portraying the characters in Stine's movie double as the Hollywood executives and actors Stine encounters.