Novelist Larry Donner (Billy Crystal) struggles with writer's block due to his resentment towards his ex-wife Margaret (Kate Mulgrew), who stole his book and garnered mainstream success and critical acclaim with it. Owen Lift (Danny DeVito) is a timid, middle-aged man who still lives with his overbearing, abusive mother (Anne Ramsey). Owen fantasizes of killing his mother but can't summon the courage to bring his desires into fruition. As a student in Larry's community college writing class, Owen is given advice by Larry to view an Alfred Hitchcock film to gain some insight into plot development. He sees Strangers on a Train, in which two strangers conspire to commit a murder for each other, figuring their lack of connection to the victim will, in theory, establish a perfect alibi. Having overheard Larry's public rant that he wish his ex-wife dead, Owen forms a plan to kill Margaret, believing that Larry will respond by killing his mother.
He tracks Margaret down to Hawaii and follows her onto a cruise ship, apparently pushing her overboard while she tries to retrieve an earring that fell out. Owen returns from Hawaii to tell Larry of Margaret's death and that Larry now "owes" him the murder of his mother, lest he inform the police Larry was the killer. After having spent the night drinking alone during the hours of Margaret's disappearance, Larry panics because he lacks a sufficient alibi. That, along with a news report announcing the police suspect foul play, convinces Larry he's the prime suspect. He decides to stay with Owen and his mother in an attempt to hide from the police. Larry meets Mrs. Lift, but despite her harsh treatment of him he refuses to kill her. Eventually, when Mrs. Lift drives Owen to the breaking point, Larry finally relents and agrees to go through with the murder.
After two unsuccessful attempts, Larry flees the Lift home when Mrs. Lift recognizes him as a suspect from a news broadcast about his ex-wife's disappearance. He boards a train to Mexico and, surprisingly, Owen and Mrs. Lift come along so as to avoid having to lie for him. During the journey, Larry's patience with Mrs. Lift reaches its pinnacle when she impolitely gives him advice on writing. He follows her to the caboose with the intent of throwing her from the train, but stops short when she almost falls off on her own. Owen begins having second thoughts about having his mother killed and comes to help Larry rescue her. Mrs. Lift is grateful at her son for saving her, but unappreciative of Larry's help and kicks him, resulting in him losing his balance, landing on the tracks, and breaking his leg.
During his recovery in the hospital, Larry discovers Margaret is still alive; she simply fell overboard by accident and was rescued by a Polynesian fisherman whom she has decided to marry. Much to his annoyance, Larry learns Margaret plans to sell the rights of her ordeal for $1.5 million dollars. On the advice of a fellow patient, Larry chooses to free himself of his obsession with his ex-wife and instead focus on his own life, thereby freeing him of his writer's block.
A year later, Larry has finished a novel based on his experiences with Owen and Mrs. Lift entitled Throw Momma from the Train. Owen visits and informs him that his mother has died (of natural causes) and that he's going to New York City for the release of his own book. Unfortunately, Owen reveals his book is also about their experiences together. Thinking his book has been scooped, an enraged Larry proceeds to strangle him, but stops when Owen shows him the book is a children's pop-up book called, Momma, Owen, and Owen's Friend Larry with the story drastically altered to be suitable for children. Months later, Larry, Owen, and Larry's girlfriend Beth (Kim Greist) vacation together in Hawaii, reflecting on the final chapter of Larry's book. Larry and Owen's books have now become best-sellers, making them both successful writers as well as close friends.
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