Andy Farmer (Chase) is a New York City sports writer who moves with his wife, Elizabeth (Smith), to the seemingly charming town of Redbud, Vermont, so he can write a novel.

To expedite the sale, the Farmers offer the town's residents a $15,000 donation to Redbud and $50 cash each if they help make a good impression on their prospective home buyers.

Their charade dazzles a pair of prospective buyers, who make the Farmers an offer on the house; however, Andy declines to sell, realizing that he genuinely enjoys small-town living.

Though the mayor does not hold the Farmers liable for the $15,000, as the sale of their house did not occur, Andy decides to pay everyone in Redbud their $50, which helps improve his standing among the townspeople.

The film ends with Andy taking a job as a sportswriter for the Redbud newspaper, and Elizabeth, now pregnant with their first child, having written multiple children's stories.

[3] In a negative review for the Los Angeles Times, Michael Wilmington said "Funny Farm – a weak-fish-out-of-water comedy about a New York City couple who see their rural paradise turned into a rustic hell–is a movie with a doubly deceptive title.

Other releases throughout the summer, including Coming to America, Who Framed Roger Rabbit, and Die Hard, all were very high-grossing films, giving Funny Farm a slim chance of high box-office results in comparison.

With the success of National Lampoon's Christmas Vacation the following year, Funny Farm eventually gained a cult following, and is now regarded by critics and Chevy Chase fans as one of his best films.