Tim Avery (JAMIE KENNEDY) works a menial job for a cartoon development company, but aspires to creating his own animated series. Though his wife Tonya (TRAYLOR HOWARD) wants to start a family, he wants to pursue his career first, which frustrates her and causes tension in the marriage.
One night, Tim's "best friend," his Jack Russell terrier Otis, digs up the ancient and powerful Mask of Loki, which grants the wearer all sorts of antic, shape-shifting powers, as it also transforms his personality, from shy to aggressive. Whether it is Otis or Tim wearing the mask, they become tremendously confident and sexually voracious. While wearing the mask, Tim performs numerous versions (Vegas-style, hip-hop, Country-Western) of "Can't Take My Eyes Off of You," and later that night, inspired by the false courage of the mask, he impregnates Tonya.
The resulting child, Alvey (LIAM & RYAN FALCONER), possesses powers conferred by the mask -- he can imitate behavior he sees on TV, blow up his head like a balloon, fight off evil forces, and most importantly, torment his father, who is left alone to care for him while mom goes on a business trip.
Another father-son relationship is also in trouble. Loki (ALAN CUMMING) is looking for his lost mask and is pushed to recover it by his father, Odin (BOB HOSKINS), the apparently always-angry Norse god of war, death, and poetry. Though he is loudly proud of his other sons, Odin thinks Loki is a failure, and so the son tries extra-hard to please him at the same time that he resents him.
Their strained relationship inverts the one developing between Alvey and Tim, who is afraid of his son's powers. When Tim realizes that the mask might help him impress his boss, Daniel (STEVEN WRIGHT) and so get the chance to create his own cartoon series, he pays more attention to his son and his dog, in order to get hold of the mask. In turn, Loki kidnaps Alvey to force Tim to turn over the mask.