Royal and Etheline Tenenbaum (Gene Hackman and Anjelica Houston) are a wealthy couple living in New York City with their three children, all of whom are incredibly gifted in particular fields. Their older son Chas is a genius of finance and chemistry, their adopted daughter Margot is a recognized playwright, and younger son Richie is a tennis prodigy. Royal, a disbarred lawyer, loves his family but is often brash and insensitive to their needs. He and Etheline separate (though do not divorce) when the children are young, and Royal moves into an expensive hotel where he remains for 22 years, isolated from his family.As adults, the three Tenenbaum children are wearied, tragic versions of their former selves. Chas (Ben Stiller) is mourning the loss of his wife in a plane crash six months earlier, and is struggling with the duty of raising their two sons, Ari and Uzi, on his own. Margot (Gwyneth Paltrow) is stoic and enigmatic, suffering from writer's block and enduring a listless marriage to the much-older neurologist Raleigh St. Clair (Bill Murray). Richie (Luke Wilson) retired from professional tennis after a mysterious emotional meltdown at a crucial match, and had been traveling the world on a cruise ship for a year. Etheline, mature and academic (in contrast to her estranged husband), works as an archaeologist. A chain of events is set in motion when Etheline's smitten accountant Henry Sherman (Danny Glover) proposes marriage to her. Etheline truly cares for Henry, but asks for time to think over her situation with Royal. Meanwhile, the family's longtime servant Pagoda (Kumar Pallana) reports the news to Royal, who resolves to win his family back.Chas and his sons move back in with Etheline, as Chas has increasing paranoia about the boys' safety. After hearing this news, Margot returns home as well, craving a change from her odd married life (she spent most of the day locked in the bathroom, indulging in her secret vice of chain-smoking). Margot is also having an affair with Richie's best friend, novelist Eli Cash (Owen Wilson), although Eli knows that Richie is secretly in love with Margot, his own adopted sister.Royal runs out of cash and is evicted from his hotel. Ashamed of facing his family with the truth, he resolves to win them back through fraud. He meets with Etheline and convinces her that he has terminal stomach cancer and wants to make amends with her and the children before his approaching death. She hesitantly agrees, but meanwhile accepts Henry Sherman's proposal. Chas is indignant over Royal's return, as he still mistrusts his father. Margot appears indifferent, while Richie is more sympathetic and loving. Royal moves into the family house with a large amount of medical equipment (borrowed from a hospital worker who "owed him a favor"). During his stay, he finally meets his grandsons and the three form a tight bond.While Royal attempts to once again relate to his children, he becomes increasingly jealous of Henry Sherman. After a verbal altercation, Henry reveals to the family that Royal is faking his terminal illness (Royal eats greasy foods and swallows Tic Tacs from a prescription bottle). A furious Etheline sends a dejected Royal out of the house. He and Pagoda get a room at the YMCA and take jobs as elevator operators at the hotel Royal was evicted from.Richie is still torn over his love for Margot, and is tormented when her husband Raleigh unveils his suspicions of her infidelity. They hire a private investigator, who uncovers many elements of her past that had been completely unknown: A nine-day marriage in Jamaica, her heavy smoking habit, her escape from boarding school, a lesbian affair in Paris, and numerous lovers in New York including Eli Cash. Raleigh is depressed by the news, but Richie is nearly destroyed. Locking himself in the bathroom, he shaves his head and his beard and slits his wrists. He is found in time for doctors to save him, but the incident shakes the family. Raleigh finally leaves Margot. Richie later escapes the hospital and returns home, finding Margot in his room listening to records. Margot is devastated that she caused Richie so much pain, and admits that she is in love with him as well.Realizing that he only wants happiness for his family, Royal provides his wife with the divorce he had denied her for decades. On Etheline and Henry's wedding day, with family and guests crowding the house and street, Eli crashes his car into the side of the house while heavily dosed with Mescaline. He nearly hits Ari and Uzi, and kills their ever-present pet Beagle. A livid Chas chases Eli through the house, causing more damage and injuries, until they both collapse and admit they need help to move on with their lives.The ceremony temporarily forgotten, the family and wedding party scatter around the house to remedy the damage. Royal buys a Dalmatian from the firefighters called to the scene, and presents it to Chas to replace the deceased Buckley. Chas makes up with his father, and Royal shows sympathy for his son's grief as a widower. Two days later, Etheline and Henry are finally married in judge's chambers.Royal lives happily with his family, particularly with Chas, Ari, and Uzi. At age 68, Royal suffers a fatal heart attack. The family gathers at his funeral, reflecting on the recent past, as Royal is buried under a gravestone featuring the epitaph "saved his family from the wreckage of a sinking battleship."