Dennis Mitchell (Mason Gamble), a five-year-old boy living with his parents next to hot-tempered neighbor George Wilson (Walter Matthau), is out of school for the summer. With both his parents working, they are forced to have various people babysit him during the day. As the summer progresses, he becomes more and more notorious among babysitters for being more than a handful, and his flagrant unwillingness to be babysat by Mrs. Wade (parent of his female nemesis, Margaret (Amy Sakasitz), proves a difficult situation when both parents are forced to go on business trips for their respective companies. However they are unable to find a babysitter tough enough to take care of Dennis for such a long while. So they move to their final resort - by asking George and his wife Martha (Joan Plowright) (who loves Dennis like a grandson).
Meanwhile, a shady drifter named Sam (Christopher Lloyd), having recently jumped a train into the relatively crime-free neighborhood, begins a silent assault on the community, robbing houses, as well as striking fear into the children that see him. Due to the absence of crime in the area, barely anybody in the community locks their doors.