Lars Lindstrom (RYAN GOSLING) is a socially awkward young man who lives in the garage apartment adjacent to the home where his brother, Gus (PAUL SCHNEIDER), and his pregnant wife, Karin (EMILY MORTIMER), reside. Lars pretty much keeps to himself, avoiding Karin's invitations to join them for dinner, as well as the ever-so-slight romantic interest displayed by one his coworkers, Margo (KELLI GARNER), all while making others question his sexuality.
Perhaps in response to that, as well as a need to deal with the inner turmoil troubling him, Lars comes up with a unique solution: he gets himself a girlfriend. And not just any girl, but Bianca, a half Brazilian, half Danish, paraplegic missionary who's on a break from helping others.
The only issue is that she's just a full-sized, anatomically correct sex doll that he's ordered off the Internet. Yet, he doesn't view her in that context and truly seems to think she's real, and thus is ever the gentleman to her. That includes bringing Bianca to dinner with Gus and Karin, and then asking if she can stay with them as it wouldn't be appropriate for her to stay in his apartment.
For Gus, this is about the last straw in terms of dealing with his odd brother, but Karin plays along, realizing something else must be going on. That's a diagnosis shared by Dagmar (PATRICIA CLARKSON), a local doctor and therapist. Realizing she must move gently, Dagmar convinces Lars that Bianca needs continued treatment, and thus gets to probe his psyche during those medical sessions.
Her advice to his family and the rest of the community is that everyone also play along, which is what they do. Accordingly, they give him the support and love he needs to work through his issues, all as his "relationship" with Bianca progresses through the normal stages, and becomes quite popular around town.