Tugg Speedman (BEN STILLER) is a big movie actor whose star is on the decline, what with too many sequels to his "Scorcher" action picks and a failed attempted to play a mentally challenged man in the film "Simple Jack." Jeff Portnoy (JACK BLACK) is the star of a series of gross-out films featuring "The Fatties," but is saddled with a drug addiction.
Alpa Chino (BRANDON T. JACKSON) is a popular hip-hop performer who has a growing product franchise and is expanding his empire into the movie business. And then there's award-winning Australian actor Kirk Lazarus (ROBERT DOWNEY JR.) who's so dedicated to his art that he immerses himself completely in whatever role he's playing, such as surgically changing his skin pigmentation to play an African American.
They're joined by rookie actor Kevin Sandusky (JAY BARUCHEL) on the set of "Tropic Thunder," a big-budget Vietnam war pic about the story of legendary Sgt. Four Leaf Tayback (NICK NOLTE), who's now on the set as an advisor to Damien Cockburn (STEVE COOGAN). He's the director who's in over his head, what with the demanding and/or troubled actors, trigger-happy explosives coordinator Cody (DANNY McBRIDE), and an angry Hollywood mogul, Lee Grossman (TOM CRUISE), and his subordinate studio exec, Rob Slolom (BILL HADER).
Four Leaf realizes what's wrong with the production -- a lack of authenticity -- and thus encourages Damien to place his actors in country so that they can experience something close to the real thing. With Cody providing the explosives and told that there are cameras everywhere to capture their scene acting, the performers go about performing their roles. While Tugg's agent, Rick Peck (MATTHEW McCONAUGHEY), is concerned about his client's lack of a digital video recorder on location, the actors don't realize they've landed in the midst of drug fields of the Flaming Dragons led by the young Tran (BRANDON SOO HOO).
Of course, they think the armed rebels are just part of the film, but are on their own when Damien takes a wrong step. From that point on, it takes a while before they eventually realize their private little movie war has turned into something completely different.