Larry Appleton, who's moved to Chicago to become a photojournalist, takes a job at a corner discount store run by his landlord, Mr. Twinkacetti. One night his distant cousin Balki Bartokomous, a sheep herder from the island of Mypos, shows up on his doorstep. Larry takes him in and helps him get a job at the store.
Balki invites Gina, a pregnant friend from his citizenship class, to stay with he and Larry while her husband is out of town. Already in a foul mood from having to share the sofa with Balki, Larry goes into a panic when he learns that Gina could go into labor at any moment.
Larry and Balki join a health club?Balki to get in shape; Larry when he falls for a fellow member. In order to score dates, Larry and Balki try to prove they're jocks, but overdoing their workout might spell trouble for their potential romances.
Balki wants to get his driver's license, but Mr. Twinkacetti doesn't think he can do it. Larry is so confident that he can, that he bets $50 and offers Balki his car.
Larry is miserable on his 24th birthday after he blew a photo opportunity. So Balki tries to throw him a last minute surprise birthday party for him to cheer him up.
Balki takes a job delivering packages for a racketeer named Vince Lucas. After Vince is busted he and Larry are asked to testify in court, but Vince threatens to kill them if they do.
Alone and fending for himself during the holidays, Steve shatters Laura's old fashioned Christmas ornament along with holiday visiting privileges at the Winslows'. Meanwhile, Carl does battle with other shoppers as he searches for a scarce teddy bear for Richie.
Larry has a date with a beauty queen, but after going to the hospital to visit Mr. Twinkacetti, he catches a cold. Balki tries to cure him with a secret Myposian cure, but it proves to be surprisingly potent.