High school student Danny Noonan is conflicted over his future, unsure if he should go to college but worried about being stuck in a menial job with no prospects. Danny works as a caddie at the exclusive Bushwood country club catering to affluent clientele. Though he usually caddies for Ty Webb, a talented golfer and the friendly playboy son of the club's co-founder, Danny volunteers to caddie for the haughty Judge Elihu Smails, the club's other co-founder and director of the caddie college scholarship program. Meanwhile, mentally unstable greenskeeper Carl Spackler is tasked with killing a destructive gopher driven onto the course by work on the adjacent property development owned by Al Czervik.
The loud-mouthed and unconvential nouveau riche Czervik attends the club as a guest, but his personality quickly earns Smails ire. After one encounter, Smails angrily throws his putter, injuring an elderly guest. Danny takes the blame for the incident to earn favor with Smails. At Bushwood's annual Fourth of July banquet, Danny and his girlfriend Maggie work as wait staff. Danny becomes attracted to Smails' promiscuous niece Lacey Underall who is visiting for the summer; She and Webb begin a brief affair.
Later, Danny wins the Caddie Day golf tournament, earning him an invitation from Smails to attend the christening ceremony for his boat at the nearby Rolling Lakes Yacht Club. There, Lacey seduces Danny and the pair have sex. Smails returns home and catches them, angrily chasing Danny out of the house. Expecting to be fired, Danny is surprised when Smails only demands that he keeps the escapade secret in exchange for receiving the scholarship.
Unable to tolerate Czervik's presence any longer, Smails announces that he will never be granted membership. Czervik counters that he is only interested in buying the club. After an exchange of insults, Czervik proposes a team golf match with Smails and his regular golfing partner Dr. Beeper against Czervik and Webb. Although Webb usually avoids all responsibilities or stress, and is reluctant to play under pressure, he agrees to join, and insults Smails by saying that Webb's father never liked Smails. Against club rules, they agree to a $20,000 wager on the match, which quickly doubles to $40,000.
During the match the following day, Danny caddies for Smails but becomes frustrated with his constant cheating. Word spreads of the wager drawing a crowd of club members and employees to observe the game. Smails and Beeper take the lead while both Czervik and Webb struggle. Czervik reacts to Smails' heckling by impulsively doubling the wager to $80,000 per team. When his own ricocheting ball strikes his arm, Czervik feigns an injury in hopes of having the contest declared a draw but learns his team will forfeit unless they find a substitute. Webb selects a reluctant Danny and Smails threatens to revoke the scholarship, but after Czervik promises to compensate Danny, he decides to take Czervik's place.
At the final hole, the score is tied. Judge Smails scores a birdie, requiring Danny to complete a difficult putt to draw even. Czervik raises the bet, offering double or nothing on Danny making the putt, which Smails reluctantly accepts. Danny's putt leaves the ball teetering over the edge of the hole seemingly costing him the game. At that moment, in his latest attempt to kill the gopher, Carl detonates plastic explosives that he has rigged around the golf course, shaking the ground and causing the ball to drop into the hole, handing Danny, Webb, and Czervik victory. While everyone begins to celebrate, Czervik sends enforcers after Smails to ensure he pays his share of the bet that will cover Danny’s college scholarship. Meanwhile, Carl slinks off after seeing the destruction his explosives have wrought.
Elsewhere on the course, the gopher emerges from underground relatively unscathed and dances to the song "I'm Alright" by Kenny Loggins.