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Nerdy social outcast students Gary Wallace and Wyatt Donnelly of Shermer High School are humiliated by senior jocks Ian and Max for swooning over their cheerleader girlfriends Deb and Hilly. Humiliated and disappointed at their direction in life and wanting more, Gary convinces the uptight Wyatt that they need a boost in popularity in order to win their crushes away from Ian and Max. Alone for the weekend with Wyatt's parents gone, Gary is inspired by the 1931 film Frankenstein to create a virtual woman using Wyatt's computer, infusing her with everything they can conceive of to make the perfect dream woman.
After they hook electrodes to a doll and hack into a government computer system for more power, a power surge creates Lisa, a beautiful and intelligent woman with reality-altering powers. She promptly produces a pink 1959 Cadillac Eldorado convertible to take the boys to a blues dive bar in Chicago, using her powers to procure fake IDs for them.
They return home drunk, where Chet, Wyatt's mean older brother, extorts $175 from Wyatt in exchange for his silence. Lisa agrees to keep herself hidden from him, but she realizes that Gary and Wyatt, while sweet, are very uptight and need to unwind. After another humiliating experience at the mall when Max and Ian pour a slushie on Gary and Wyatt in front of a crowd, Lisa tells the bullies about a party at Wyatt's house, before driving off in a Porsche 928 she conjured for Gary.
Despite Wyatt's protests, Lisa insists that the party take place. She meets Gary's parents, Al and Lucy, who are shocked and dismayed at the things she says and her frank manner, to Gary's embarrassment. After she pulls a stainless steel.44 Magnum handgun on them (later revealed to Gary to be a water pistol), she alters their memories so that Lucy forgets about the conflict; however, Al forgets altogether that they have a son.
At the Donnelly house, the party has spun out of control. Gary and Wyatt take refuge in the bathroom, where they resolve to have fun despite having embarrassed themselves in front of Deb and Hilly. In Wyatt's bedroom, Ian and Max convince Gary and Wyatt to recreate the events that created Lisa, but the process fails. Lisa chides them over their misuse of the process to impress their tormentors. She also explains that they forgot to connect the doll; thus, with the bare but live electrodes resting on a magazine page showing a Pershing II medium-range ballistic missile, a real missile emerges, erupting through the floor and ceiling of the house.
Meanwhile, Wyatt's grandparents arrive and confront Lisa about the party, but she places them in a frozen, catatonic state and hides them in a kitchen cupboard. Lisa realizes that the boys need a challenge to boost their confidence and has a gang of mutant bikers crash the party, causing chaos and terrorizing the guests.
The bikers take Deb and Hilly hostage. Wyatt and Gary confront the bikers, which causes Deb and Hilly to fall in love with the boys. The bikers leave. The next morning, Chet returns from duck hunting to discover his home in disarray: A localized snowstorm fills his room, and a huge missile stands in the middle of the house. Lisa has the boys escort the girls home while she talks to Chet alone. Gary and Wyatt proclaim their feelings, and both girls reciprocate.
Returning to the house, the boys discover Chet, now transformed into a foul, talking toad-like creature. He apologizes to Wyatt for his behavior. Upstairs, Lisa assures them that Chet will soon return to normal, and, realizing that her purpose is complete, tearfully hugs both Gary and Wyatt before de-materializing. As she leaves, the house is "magically" cleaned and everything transformed back to normal, including Chet. Wyatt's parents return home, completely unaware that anything unusual has happened. Later, Lisa turns up as the new gym teacher at Shermer High School.