The narrative begins with Jang-saeng and Gong-gil fleeing their travelling troupe after Jang-saeng kills their abusive manager to protect Gong-gil from sexual exploitation. In Hanyang, they assemble three clowns and mock King Yeonsan, leading to their arrest. After wagering their lives on making the King laugh, Gong-gil's quick wit delights the monarch, securing them residence in the palace.
Their satirical plays are soon co-opted by Yeonsan to purge corrupt ministers and unearth the conspiracy surrounding his executed mother, Queen Lady Yun. During a performance reenacting her poisoning, Yeonsan descends into madness, slaughtering court concubines and triggering the Queen Dowager's death. Realizing the court is a lethal trap, Jang-saeng attempts to leave, but Gong-gil stays out of pity for the King.
Consort Jang Nok-su frames Gong-gil with forged subversive flyers; Jang-saeng takes the blame and is imprisoned. Although freed by Eunuch Cheo-sun, Jang-saeng refuses to abandon Gong-gil. He sneaks back into the palace, walks the tightrope blindfolded while openly mocking the King, and has his eyes burned out with searing iron as punishment. A devastated Gong-gil attempts suicide by slitting his wrists during a puppet show, but is saved.
In the climax, rebel forces initiate a coup and storm the palace. Jang-saeng and Gong-gil reunite on opposite ends of a palace tightrope. Rejecting worldly wealth, nobility, or kingship, they vow to be reborn as clowns together. As the rebel army breaches the courtyard and arrows fly, both jump into the air from the tightrope. The film closes on a transcendent afterlife scene where the performers dance freely in an open green meadow without ropes or rulers.