Elwood P. Dowd is an affable man who claims to have an unseen friend Harvey — whom Elwood describes as a six-foot, three-and-one-half-inch tall pooka resembling an anthropomorphic rabbit. Elwood introduces Harvey to everyone he meets. His social-climbing sister, Veta, increasingly finds his eccentric behavior embarrassing. She decides to have him committed to a sanitarium. When they arrive at the sanitarium, a comedy of errors ensues. The young Dr. Sanderson mistakenly commits Veta instead of Elwood, but when the truth comes out, the search is on for Elwood and his invisible companion. When Elwood shows up at the sanitarium looking for his lost friend Harvey, it seems that the mild-mannered Elwood's delusion has had a strange influence on the staff, including sanitarium director Dr. Chumley. Only just before Elwood is to be given an injection that will make him into a "perfectly normal human being, and you know what bastards they are!" does Veta realize that she would rather have Elwood the same as he has always been — carefree and kind — even if it means living with Harvey. But the only reason Veta hears from the cab driver is that she can't find her coin purse and has to get the cab fare from Elwood. That is when the cab driver sees what is happening and goes into his spiel. Later Veta realizes that the purse was there all along, but Harvey hid it from her.