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Funny People is truly funny! George Simmons (Adam Sandler) is an extremely successful comedian and actor, having starred in a number of successful lowbrow comedy films. But he is also very self-absorbed, lonely and estranged from his family by choice. When he finds out that he suffers from a rare form of leukemia and his treatment has only an 8 percent chance of success, he falls into a depression, where he finds solace watching old videos of his early stand-up and other work. It is then, he decides to go back to his roots and start performing standup comedy again.

Meanwhile, Ira Wright (Seth Rogen) is an aspiring stand-up comedian who dreams of quitting his day job at a deli. He shares an apartment with roommates Leo Koenig (Jonah Hill), another aspiring comedian who has found more success than Ira, and Mark Taylor Jackson (Jason Schwartzman), an actor who has recently come into wealth and fame as the star of a lame NBC sitcom called Yo Teach! Ira has a crush on Daisy (Aubrey Plaza), a female comedian who lives nearby, but has been unable to act on it, and Mark gives him an ultimatum to act on it or else he will sleep with her.

George and Ira meet at a comedy club, where George unexpectedly takes the stage to deliver a dark, depressing routine which Ira has to follow. Ira draws some laughs by mocking George's morbidity while George watches from the back. The next morning, George calls Ira and invites him and Leo to write some jokes for George to perform at a MySpace corporate event. Ira eagerly agrees, but claims that Leo is too busy.

The event goes over well, and George hires Ira as a joke writer and personal assistant. The next morning, George informs Ira of his health condition. Ira supports and cares for George as the illness and treatment take their toll on his health; meanwhile, both comedians work on their acts. Eventually, Ira breaks down while with George at a restaurant, begging George to tell more people about his prognosis so Ira doesn't have to carry the whole burden.

George is reluctant but agrees, talking about his disease with his comedian friends and making amends with his estranged family. He also receives a visit from his ex-fiancé Laura (Leslie Mann), now married with two daughters. Laura says that her husband Clarke (Eric Bana) is always away to China on business and that he cheats on her, the same way that George did, and she regrets breaking up with George. They tearfully reconcile.

George comes to Thanksgiving at Ira's apartment, along with Ira's roommates and the cast of Yo Teach! Leo finds out that George had asked him, as well as Ira, to write jokes for him, and is angry at Ira for not telling him. Ira is angry at Daisy for sleeping with Mark before the two were set to go on their first date at a Wilco concert, and Ira calls off their date. Leo later accepts a role on Yo Teach!

George goes to the doctor for the results of his test and he learns that the medicine has been working and that there aren't any traces of the disease in his blood, but there is a possibility that it could resurface. Ira is happy with the news, while George is unsure of what to do with his life. He ultimately decides that he wants a long-term relationship. He calls Laura, but is unable to tell her about his health. She invites him to visit her in Marin County.

George and Ira go to San Francisco to perform at the Orpheum, and Laura meets them there. George tells Ira to tell Laura that he's better during the intermission between Ira's act and George's act. Ira is puzzled as to why George didn't tell her already, but ultimately agrees to tell her himself. He does so, leaving Laura speechless. Later she confronts George, who tells her that he didn't tell her sooner because he didn't want to jinx it. He and Laura embrace and she invites the two to her house.

George and Ira arrive and spend time with her and her daughters. George and Laura go out to get groceries while Ira watches the kids. George and Laura actually sneak into the guest house to have sex, then Laura talks about possibly leaving Clarke. Ira learns from her two daughters that Laura is still in love with George and Ira tells them that George is better. George and Laura go back into the main house and tell Ira they will just order pizza. Ira, however, easily finds out that they had sex and becomes worried.

While they are waiting for the pizza to arrive, Clarke unexpectedly arrives home, leading to an awkward first encounter between George and Clarke and an awkward dinner. Laura asks George and Ira to keep up the façade of George still being sick as Clarke had despised George before learning of his illness and sympathized with him after learning of it and Clarke will suspect something if he learns George is better. George and Ira spend the night in the guest house and watch a game of Aussie In the morning, Clarke gives George a tearful goodbye, thinking he will die soon. Then, his daughters reveal that George is actually better, as Ira had told them earlier. Clarke then confronts Laura about this as he suspects she's cheating on him. Laura tries to explain that he may not be entirely better, but Clarke doesn't believe her. When Laura then calls him out on his infidelity, Clarke leaves the house. Laura tells George that she will meet with Clarke later to tell him to find a new place. Ira tells George that he thinks they should leave and that it's not worth it to break up a twelve-year marriage so that George will be happy, but George yells at him and threatens to fire him.

The next day, George, Ira, and Laura watch a video of Mable performing "Memory" from Cats. Ira and Laura find the performance moving, but George finds it hilarious and ridicules it to where it offends Laura. Laura then leaves for the airport to talk to Clarke, planning to tell Clarke that, when he gets home from his trip, to find somewhere else to live. Ira tells George he's going to the store to buy cigarettes, but instead follows Laura to the airport. Laura meets up with Clarke, who tells her that he wants to give their marriage another try. Laura, now conflicted with her feelings, ultimately agrees and says her fling with George was just a flirtation. Ira catches their interaction and tries to sneak away, but Clarke spots him. Ira is forced to tell him that George had sex with Laura and Clarke vows to kill him. Laura then chews Ira out for entering her life and the three race back to the house.

Clarke catches George watching TV with the kids and chases him outside and starts beating him. George then yells at Ira for lying to him and then asks Laura to tell Clarke she still loves him, but Laura sides with Clarke realizing that George will never care about her girls as much as Clarke. Clarke then feels it was his own fault this happened and apologizes to George. Laura and Clarke go back into the house and George and Ira head back to Los Angeles. A heated exchange develops between the two when George berates Ira for his betrayal and officially fires him as his assistant. Ira however, fires back at George for not learning anything from his near-death experience and that his insensitivity hasn't changed. George drops Ira back at his apartment and the two part ways. Leo forgives Ira for lying to him and Mark offers Ira a part on Yo Teach! if one is offered, but Ira declines.

George ends up lonely again, while Ira goes back to his job at the deli and enters into a relationship with Daisy. Ira meets up with George again at a club and George watches Ira being much more confident on stage. The next day, George finds Ira working at the deli and asks to speak with him. George admits that even though he is no longer sick, his attitude still needs much improvement. George offers Ira some jokes he wrote down to help Ira's act, proving that he is making an attempt to become a better person.

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