Plot

In Gotham City, two wealthy socialites, Tucker (Paul Reubens) and Esther Cobblepot (Diane Salinger) are dismayed at the birth of their malformed and feral son Oswald. They throw their deformed infant child into the sewers, feeling that Gotham's high society would not approve after witnessing their son kill their pet cat.

However, a flock of penguins living in the sewers rescue him and raise him. 33 years later, the child becomes the criminal Penguin (Danny Devito). Penguin heads the Red Triangle gang, a group of former circus workers connected to child disappearances across the country. His hideout is in the Arctic exhibit at the derelict Gotham Zoo.

Penguin kidnaps businessman Max Shreck (Christopher Walken) from a public event where he was kick-starting the Christmas festivities with the mayor. Shreck owns several businesses like a textile plant, firetraps, toy store and others. The police are incapable of handling the mayhem caused by the circus workers, and signal Batman. Batman uses a combination of his non-lethal gadgets to defeat several of Penguin's henchmen. During the chaos, Batman saves Max's secretary Selina from being killed by one of the goons. Selina finds a taser on the goon and takes it with her. Penguin still manages to escape with Shreck.

Penguin blackmails Shreck with evidence of his corruption and murderous acts (like killing his own business partner and throwing his body in the sewers where Penguin found it) to compel his assistance in reintegrating Oswald into Gotham's elite. Penguin says that he wants a life of respect on the surface and has been in the sewers too long. Penguin also adds that he wants to know his identity and finding out about his parents. Max is returned to the surface.

Meanwhile, Max finds out his timid secretary, Selina Kyle (Michelle Pfeiffer), has found out that Max is planning to build a power plant which will drain Gotham City of its electricity and store it in a giant capacitor, which he will sell later at enormous profits. Max pushes her out of a window, ensuring that she will not tell anyone.

However, a flock of alley cats lick her corpse, reviving her. She returns home, suffers a mental breakdown and makes a homemade black vinyl catsuit and becomes a costumed vigilante under the name of "Catwoman".

Shreck orchestrates a staged kidnapping of the mayor's infant child, allowing Oswald to rescue it and become a public hero. In exchange, Oswald requests access to the city's birth records, ostensibly to learn his true identity by researching Gotham's first-born sons. Penguin finds out his parents are dead, and his name is Oswald Cobblepot. However, billionaire Bruce Wayne (Michael Keaton) is suspicious of Oswald and finds out that Penguin is the leader of the Red Triangle Circus Gang who commits crimes throughout Gotham. As Batman, Bruce decides to protect Gotham from the gang.

To Shreck's surprise, Selina returns to work with newfound confidence and assertiveness, immediately capturing the attention of visiting billionaire Bruce Wayne.

Max decides to make Penguin the mayor of Gotham City because the current mayor (Michael Murphy) will not approve of Max's power plant. To do this, Penguin has the Red Triangle Circus Gang create a riot, causing the citizens to lose all faith in the mayor. Batman's attempts to stop the chaos lead to a confrontation with Catwoman.

During the riot, Catwoman vandalizes Shreck's Department Store to gain revenge on Max. When Batman and Penguin confront each other, she intervenes before the store blows up. Penguin escapes as Catwoman fights Batman. Batman pushes her off a rooftop, but a litter-box on a truck saves her.

The next day, Penguin and Catwoman collaborate on a plan to kill Batman. Meanwhile, Bruce and Selina develop a romantic relationship. Penguin and Catwoman kidnap the Ice Princess (Cristi Conaway), an actress chosen to turn on the Gotham City Christmas Tree Lights, framing Batman for it. Batman finds her but Catwoman takes her to a rooftop where Penguin releases a swarm of flying bats which make the Princess retreat backwards, falling off, making her death seem like Batman's fault.

When Catwoman objects to the murder and rebuffs Oswald's romantic advances, he attacks her, sending her crashing through a glasshouse. Batman enters the Batmobile and finds out that Penguin has control over it, due to a device Penguin's gang installed. Penguin takes it on a devastating rampage but Batman regains control over it, escaping death.

Before regaining control, Batman records Oswald's insulting tirade against Gotham's citizens and plays it during Oswald's mayoral rally, destroying his public image and forcing him to retreat to Gotham Zoo. There, Oswald renounces his humanity, fully embracing his identity as the Penguin, and sets his plan in motion to abduct and kill Gotham's first-born sons (including Max Shreck) as revenge for his own abandonment

Batman saves all the babies, forcing Penguin to execute an alternate plan to destroy the entire city with his army of penguins armed with missiles on their backs. However, Batman's butler, Alfred Pennyworth, overrides the control signal, redirecting the penguins back to Gotham Zoo. As the missiles obliterate the zoo, Batman unleashes a swarm of bats, causing the Penguin to fall into the contaminated waters of the Arctic exhibit.

Selina attempts to kill Shreck at his charity ball, but Wayne intervenes, and they accidentally discover each other's secret identities. Catwoman arrives to confront Shreck, rejecting Batman's plea to abandon her quest for vengeance and leave with him. Max shoots Batman, knocking him out and Catwoman claims that she has six of her nine lives left although Max shoots her four times, leaving her with two lives. Catwoman kisses Max with an electrical taser between their lips and breaks an electric wire, creating an explosion which kills Max, but Batman cannot find Selina's corpse.

Penguin emerges from the water but chokes on his own blood from internal injuries from the fall and his emperor penguins drag his corpse into the sewer water.

Afterwards, Alfred (Michael Gough), Bruce's butler, drives Bruce home. Suddenly, Bruce spots Selina's shadow in an alley. He investigates the area, only finding her black cat, Miss Kitty, taking her with him before exchanging Christmas wishes with Alfred. Finally, the Batsignal lights up in the night sky and Catwoman rises up into the foreground and stares at it, confirming that she is alive.