The film opens in the backyard of the Matthews family. Youngest daughter Sophie (Lily Bird) realizes she is dreaming as she sees her father Paul (Nicolas Cage) by the pool, and everything around them starts floating up to the sky just before Sophie wakes up.
Paul is a mild-mannered biology professor, married to Janet (Julianne Nicholson), and in addition to Sophie, they have an older daughter, Hannah (Jessica Clement). He goes to a restaurant to meet with a former colleague, Sheila (Paula Boudreau), over giving him credit for an article she is writing based on a subject that he wanted to write a book about. He even tries to record their conversation to get her to admit that he deserves credit, but he gets nothing.
Paul and Janet go to a play, where they run into an ex-girlfriend of his named Claire (Marnie McPhail), who claims that Paul has been appearing in dreams of hers lately, but she assures the couple that the dreams aren’t sexual. She later meets with Paul privately to ask if she can write about the dreams she has been having with him, to which he agrees.
Soon, more people, including Paul and Janet’s friends Richard (Dylan Baker) and Carlota (Krista Bridges), all claim to be seeing Paul reappearing in their dreams. He soon gets messages from people on Facebook since Claire attached a link to his profile in her article, and hundreds of other people contact Paul and saying they are dreaming about him. Paul asks his students if they have dreamt about him, and they all say yes. However, Paul is disappointed to learn he is nothing more than an observer passing through other weird events. Paul later asks Janet if she dreams of him, and she says no. He asks what kind of dream she would like to have of him, and she says she would like to see Paul save her while wearing an oversized suit like David Byrne of Talking Heads.
At night, a mentally ill man breaks into the Matthews home and threatens to kill Paul. After police take care of the man, Paul goes to sign with a PR firm since he is now something of a well-known public figure. He meets three members of a team – Trent (Michael Cera), Mary (Kate Berlant), and Molly (Dylan Gelula). Trent tries to get Paul to sign up as a spokesperson for Sprite, but he is more interested in using the exposure to get his book published.
Molly later approaches Paul and invites him to get a drink. After Paul mistakenly assumes Janet is with another man (he heard a man’s voice over the phone but she said it was someone they both know), he accepts Molly’s invitation. She admits to him that her dreams about him involve them having passionate sex. While Paul seems initially uncomfortable at the idea, he joins Molly back at her apartment to recreate the dream. It gets ruined when Paul farts twice and prematurely ejaculates, forcing him to leave in humiliation. Back at home, Paul is angered to discover that Sheila published her article without giving him credit.
Sophie later dreams of her dad stomping into her room while wearing a creepy smile, which frightens her. Later, some of Paul’s students experience horrifying nightmares of him attacking, raping, or murdering them, which causes them to cut his class. Even after some of the staff tries to help Paul, the students are terrified of him. One of them spray-paints “loser” on his car, which causes him to have an outburst that only makes people turn on him more. He is eventually put on an extended leave.
Everybody else starts to have nightmares involving Paul. He and Janet go to Richard and Carlota’s home for their usual dinner parties, but Carlota cannot do it any longer, which causes Richard to send Paul and Janet away. Paul later goes to a diner where he is told that his presence is making people uncomfortable. Another patron tries to get Paul to leave by spitting in his food, which leads to a fight after Paul throws the plate at him and gets a black eye and bloody nose for his troubles. He is also told by Sophie’s teacher Kayla (Jennifer Wigmore) that he cannot attend Sophie’s upcoming play because others have requested for him not to be there.
The rest of Paul’s family also suffers as a result of the nightmares. Janet nearly loses her job due to her marriage to him, and Sophie is getting picked on at school, with people calling her dad Freddy Krueger. They suggest he issue a public apology, but he angrily refuses. Paul later appears to find himself being chased down the street by someone with a crossbow, shooting him twice with arrows. The figure approaches him, revealed to be a dream version of Paul in one of his own nightmares. This causes Paul to make a video apology, but because he paints himself as the victim, Janet and the girls view it as pathetic and self-pitying.
Paul later goes to Sophie’s school to sneak into the play. Kayla catches him and tries to keep him out, but after a struggle, Paul slams the door on her, causing Kayla’s pinky finger to be severed. Now convinced Paul really is dangerous, the other parents forcibly remove him from the school, while his wife and daughters watch in horror and shame.
In the aftermath, Paul divorces Janet and finds a new place to live, although it is hinted that they still love each other, and at least Sophie wants her father back home (Hannah is still too embarrassed). Eventually, nobody dreams of Paul anymore, but he is credited for the development of dream traveling. Tech billionaire Brian Berg (Nicholas Braun) develops a device that allows people to travel into anybody else’s dreams, but a group of influencers are using it for advertising in people’s dreams. People also believe Paul actively chose to terrorize others in their dreams.
Paul goes back to Trent to help him fix his image. He writes an autobiography in France that he called “Dream Scenario”, only for them to re-translate it as “I Am Your Nightmare”. The book is published smaller than Paul had hoped, and it doesn’t sell very well. He does a tour in France, and during a signing, a light falls from the ceiling and hits him on the head.
Paul buys the dream-traveling device and uses it to attempt to go into Janet’s dream. He finds himself in the oversized suit she wanted, going to save her from being burned to death. They then walk home and share a romantic moment, with Paul whispering to Janet that he wishes this was real. He then floats to the sky as Janet begins to wake up.
