Bob Wiley (Bill Murray) is a good-natured man who suffers from multiple phobias. He feels good about the results of an initial session with Dr. Leo Marvin (Richard Dreyfuss), a New York psychiatrist with a huge ego, but is immediately left on his own with a copy of Leo’s new book, Baby Steps, when the doctor goes on vacation to Lake Winnipesaukee, New Hampshire. Unable to cope, Bob follows Leo to his vacation home, where Leo is annoyed because he doesn't see patients on vacation but seeing how desperate Bob is gives him a prescription telling him to take a vacation from his problems. Bob seems to have made a breakthrough, but the next morning shows up and says that he decided to take a vacation in spirit and reality and that his stay in town is facilitated by the Guttmans (Tom Aldredge and Susan Willis), a couple who hold a grudge against Leo as they scrimped and saved for years to buy the vacation home of the Marvins, only for Leo to beat them to the punch.
Bob suggests that they start a friendship, although Leo thinks being friends with a patient's beneath him and attempts to avoid any further contact, but Bob gets along fine with the rest of Leo’s family and continues to socialize with them. Leo’s children, Anna (Kathryn Erbe) and Sigmund (Charlie Korsmo), find that Bob relates well to their problems with his down-to-earth approach, in contrast with their father’s clinical approach, while Bob begins to gain an enjoyment of life from his association with them. Bob goes sailing with Anna and helps Sigmund to dive into the lake, which Leo was unable to help him with. Leo then angrily pushes Bob into the lake and Leo’s wife, Fay (Julie Hagerty), insists on inviting Bob to dinner to apologize—although Bob thinks Leo’s slights against him have been accidental. At dinner, Bob's comment on Baby Steps causes Leo to choke, and Bob saves his life by repeatedly and violently landing his full weight on the doctor's prostrated form, in a preposterous and painful variant of the Heimlich maneuver. A thunderstorm then forces Bob to spend the night. Leo wants Bob out of the house by 6:30. But, Bob's still present as Leo's interviewed on Good Morning America to publicize Baby Steps. Leo's mentioning that Bob's a patient gets him in the interview as well, and Leo manages to make a fool of himself while Bob speaks glowingly of Leo and the book and steals the limelight.
Outraged, Leo throws a tantrum and then attempts to have Bob committed, but Bob's soon released after befriending the staff of the institution and demonstrating his sanity by telling psychology themed jokes. Forced to retrieve him, Leo then abandons Bob in the middle of nowhere, but Bob quickly gets a ride back to Leo’s house while a variety of mishaps delay Leo until nightfall. Leo's then surprised by the birthday party that Fay has been secretly planning for him, and he's delighted to see his beloved sister, Lily (Fran Brill). But when Bob appears and puts his arm around her, Leo becomes completely enraged and attacks him. Bob remains oblivious to Leo’s hostility, and Fay explains that Leo has been acting unacceptably as a result of an inexplicable grudge against Bob, and she reluctantly asks him to leave; Bob sadly agrees. Meanwhile, Leo breaks into a sporting goods store, stealing a shotgun and 20 pounds of explosives. Bob becomes terrified while walking through the dark woods and is easily kidnapped at gunpoint by Leo, who straps the explosives to Bob and ties him up, calling it "death therapy." Using Leo’s "Baby Steps" approach, and convinced that the explosives are fake, Bob manages to free himself; he reunites with Leo and his family out on the vacation home’s dock as the explosives destroy the house. This leaves Leo in a catatonic state.
Some time later, Leo's brought to Lily and Bob’s wedding. Upon their pronouncement as husband and wife, Leo regains his senses and screams, "No!" but the sentiment's lost in the family’s excitement at his recovery. The film ends on a title card:
Bob went back to school and became a psychologist.
He then wrote a huge best seller: Death Therapy.
Leo is suing him for the rights.
- Julie Hagerty as Fay Marvin
- Tom Aldredge as Mr. Guttman
- Susan Willis as Mrs. Guttman
- Roger Bowen as Phil
- Brian Reddy as Carswell Fensterwald, M.D.
- Doris Belack as Dr. Catherine Tomsky
- Melinda Mullins as Marie Grady, Good Morning America Interviewer
- Marcella Lowery as Betty, Switchboard Operator
- Margot Welch as Gwen, Switchboard Operator
- Barbara Andres as Claire, Dr. Marvin's Secretary
- Aida Turturro as Prostitute
- Stuart Rudin as Crazy Man in New York Street
- Cortez Nance Jr. as Lobby Doorman
- Lori Tan Chinn as Bus Driver
- Dennis Scott as Motorcycle Cop (as Dennis R. Scott)
- Charles Thomas Baxter as Nursing Home Guard
- Donald J. Lee Jr. as Nursing Home Attendant
- Reg E. Cathey as Howie, Good Morning America Director
- Tom Stechschulte as Lennie, Good Morning America Producer
- Russell Bobbitt as Good Morning America Crew Member
- Richard Fancy as Minister
- Joan Lunden as Herself
- April Cantor - (uncredited)
The film was a financial success. It grossed $63 million domestically during its original theatrical run plus an additional $29 million in video rentals and sales bringing its overall domestic gross to $92 million. Critical reaction was also favorable. It currently holds an 82% on Rotten Tomatoes with a majority of critics giving it positive reviews. When the television program Siskel and Ebert reviewed it, Roger Ebert gave it a "thumbs up" rating praising the different performances of Bill Murray and Richard Dreyfuss onscreen together as well as most of its humor. He said it was Bill Murray's best one since Ghostbusters in 1984. Gene Siskel, on the other hand, was not a fan of it and gave it a "thumbs down." He felt Murray gave a very funny and enjoyable performance in it but was rather upset by the Dreyfuss character and his angry and arrogant behaviors. He felt it would have been funnier if Dreyfuss had not given such an angry performance in it and said that Dreyfuss ultimately ruined it for him. Leonard Maltin also gave it a favorable review: in Leonard Maltin's Movie and Video Guide he gives it three stars out of a possible four, saying it's "a very funny outing with Murray and Dreyfuss approaching the relationship of the road runner and the coyote." Maltin faulted it only for its ending, which he found very abrupt and silly. In the years since its release it has become a cult classic among fans, and has been shown in some psychology classes in schools and colleges across America.
- The film was filmed in and around the town of Moneta, Virginia located on Smith Mountain Lake. Production had to go south because at the real Lake Winnipesaukee in New Hampshire, the leaves were already turning for the fall season. While there is a lake in New Hampshire named Winnipesaukee, there is no town by that name (as the film implies). This generated chuckles in lake area movie cinemas where the film was shown. Filming lasted from August 27- November 21 1990.
- The house used in the filming still stands. The exploding house was a prop one built for the explosion on a nearby lake front lot; the local inhabitants gathered to watch the explosion from land and boats.
- The scenes of Bob arriving in town on the bus with his goldfish were filmed in downtown Moneta, which was spruced up and repainted for the movie.
- The local institute which Leo tries to commit Bob in is actually the local Elks Home for retirees in the nearby town of Bedford, Virginia.
- Originally director Frank Oz had Woody Allen in mind for the role of Dr. Leo Marvin, given his reputation for quirkiness in his films. He declined the role, and Richard Dreyfuss ultimately was cast.
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