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In Murphysboro, Illinois, Tammy Banks (Melissa McCarthy) strikes a deer on the way to her job at Topper Jack's (a fictional fast food restaurant), causing significant damage to her vehicle. Once she arrives at Topper Jack's, her supervisor, Keith Morgan (Ben Falcone), is forced to sack her for her frequent tardiness. Upon leaving, Tammy indignantly contaminates or steals food. After her car dies on the way home on Illinois Route 13, she eventually arrives to find her husband, Greg (Nat Faxon), eating a romantic meal with their neighbor, Missi (Toni Collette). Upset, Tammy leaves and walks two doors down to her parents' house.
She tells her mother, Deb (Allison Janney), about her plans to leave and takes her grandmother Pearl's (Susan Sarandon) car. Pearl requests to come along. Tammy initially refuses but ultimately agrees when Pearl proves that she has a large sum of cash. Tammy has beer with Pearl, and the next morning they wake up near a park where Pearl convinces Tammy not to go back home. Pearl wants to go to Niagara Falls with Tammy since she hadn't gone as a child. Along the way the two stop in a bar in Louisville, Kentucky, Tammy meets Earl Tillman (Gary Cole) and his son Bobby (Mark Duplass), and Earl hooks up with Pearl. Tammy and Bobby begin to make a love connection as Pearl and Earl drunkenly make out in the car. Bobby gives Tammy his number to call him so he can pick up Earl. Back at the hotel, Tammy is forced to sleep outside. The next morning, Bobby picks up Earl, and the two leave. Tammy, infuriated with Pearl, leaves her, but returns after feeling guilty. Tammy and Pearl are arrested after Pearl gets caught buying a case of beer for two teenagers (Mark L. Young and Mia Rose Frampton) as well as shoplifting a pint of whiskey for herself. Tammy is released, but Pearl stays at the jail for possessing illegal prescription drugs.
To bail out Pearl, Tammy robs a Topper Jack's, where she converses with employees Becky (Sarah Baker) and Larry (Rich Williams). Finally having obtained the money, she rushes to the prison to bail her out, but Bobby has already bailed out Pearl. With the help of Pearl's wealthy lesbian cousin Lenore (Kathy Bates) (who made her fortune off of a small chain of pet supply stores), they destroy the car to hide the evidence from the robbery. The two then stay at the home of Lenore and her wife, Susanne (Sandra Oh). At a 4th of July party thrown at the house, Pearl gets drunk and humiliates Tammy by making rude comments about her weight and appearance in front of all the guests. After Tammy runs off to the dock on the lake by the house, Lenore follows her to both comfort her and offer her some tough love, telling her that she has always been complaining about her life, but has never done anything about it. She tells Tammy that if she wants to make things better for herself she needs to work hard to make it happen.
Later in the morning, Tammy brings coffee to Pearl, who is presumably asleep outside. After repeatedly trying to wake her, Pearl does not wake up and Tammy assumes she is dead. She, Lenore, and Susanne grieve Pearl's death, but Pearl suddenly awakens, much to everyone's shock. Pearl was actually unconscious due to the large amount of alcohol she drank the previous night. Tammy is relieved, and she tearfully demands Pearl to get help for her drinking problem. The ambulance arrives and takes Pearl to the hospital. The police arrive as well, and Tammy is arrested.
Tammy is released from prison 38 days later, and her father, Don (Dan Aykroyd), picks her up. He offers to kill Greg for her, though she declines. Returning home, Tammy finds that Greg and Missi have packed Tammy's belongings. She and Greg agree to an amicable divorce. She walks down the street to her parents' place and finds out that Pearl is now living in Brookview Retirement Home. Tammy goes to Brookview to break her out, but Pearl is actually happy there. She has been attending Alcoholics Anonymous meetings at the home, and she is dating one of the men there. However, they do still take a trip to Niagara Falls.
At Niagara Falls, Bobby surprises Tammy there and they kiss. Tammy tells him about her choice to move to Louisville to get a fresh start in life and get closer to him. The last scene shows Missi leaving Greg to be with Keith and Tammy befriends Becky and Larry.