A film shoot in Peru goes badly wrong when an actor is killed in a stunt, and the unit wrangler, Kansas, decides to give up film-making and stay on in the village, shacking up with local prostitute Maria. But his dreams of an unspoiled existence are interrupted when the local priest asks him to help stop the villagers killing each other by re-enacting scenes from the film for real because they don't understand movie fakery...

In a remote, mountain village in Peru, the natives watch with fascination as an American movie company shoots a violent Western about the life and death of Billy the Kid. Not understanding that the fistfights, gun battles, explosions and deaths are fake, the Peruvians become obsessed with the movie, much to the chagrin of the local priest, who bemoans that his flock no longer follows the word of God. Idealistic, melancholy stuntman Kansas falls in love with the region and a prostitute, Maria, and decides to stay after the filmmakers leave. Because the sets have been left standing, Kansas hopes to attract other American production companies, but despite his appeals, receives only rejection letters. Kansas also dreams of building a mountaintop ski resort until the pragmatic, materialistic Maria points out that no snow falls in the area. The priest begs Kansas to help him persuade the locals to abandon their attempts to simulate the process of filmmaking, in order to recreate the American movie using cameras, microphones and other equipment constructed from junk metal and wooden frames. Observing the Peruvian director, who styles himself after the American director, Sam, by wearing Sam's abandoned Confederate hat, direct a fight in which the participants are actually hitting each other, Kansas demonstrates how to pull punches. Ridiculing Kansas for his cowardice and fakery, the men push him away and continue "filming" their desperate struggle. Despite his lack of business, over time Kansas builds a nice home for Maria, complete with a swimming pool and refrigerator. When their finances begin to suffer, however, and Kansas asks Maria to economize, she retorts that she could support him by returning to work. One afternoon, Kansas hangs out at a hotel bar with his American friend, Neville Robey, who also worked on the movie, and Neville discusses his need for $500, with which he intends to prospect for gold. The two men flirt with Mrs. Anderson and her daughter Cress, rich, bored American tourists who invite them to dinner. There, Mrs. Anderson's husband Harry, a vulgar businessman, tells dirty jokes that Kansas and Neville pretend to enjoy, although Maria is uncomfortable in the sophisticates' company. Neville tells Harry about his gold mine and need for financial backing, but Harry evades him by asking Kansas to organize some entertainment. Kansas takes the Americans to the brothel despite Maria's pleas that she does not want them to know that she once worked there. Kansas angrily orders her to arrange with the madam for a show, and even though she is jealous of the attention Kansas pays to Mrs. Anderson, Maria complies. The American tourists watch enraptured as two prostitutes stage a lesbian sex show for them, with Mrs. Anderson becoming highly aroused. When Maria's former pimp storms in, the drunken Kansas challenges him, and in order to protect Kansas, Maria leaves with the man. Mr. Anderson urges Kansas to forget her and enjoy the show, but when the jealous Kansas returns home, he beats Maria. The next day, a badly bruised Maria demands that Kansas give her Mrs. Anderson's fur coat as an apology. When Kansas goes to the Andersons' home to ask for the coat, they laughingly agree to give him Cress's mink stole. When they are alone, however, Mrs. Anderson sadistically makes Kansas kneel in front of her and, striking him, tells him that he is her whore now. Soon after, Kansas returns with the stole, delighting Maria, although he tells her that they must move out of their home and live with her mother. Selling the house, Kansas uses the money to go prospecting with Neville, although during their journey, Neville confesses that all he knows about gold comes from watching movies, especially The Treasure of the Sierra Madre . Despite their ignorance, the pair stake out a mine, but when they invite Harry to become their partner, he replies that the mine is too far from a road and would cost too much to develop. He offers to buy their claim outright, infuriating Neville until Kansas must usher Harry out of Neville's apartment. Kansas attempts to calm the drunken Neville, telling him that at least they did find gold, and that they are already rich because of their friendship. As Kansas waits in the living room, however, Neville goes into the next room and commits suicide by shooting himself. Later, the villagers have captured Kansas and are forcing him to participate in their continued filming. Bullied, exhausted and often drunk, Kansas stumbles around in the setups ordered by the Peruvian director as he recreates the American movie. When he attempts to escape, Kansas is shot in the shoulder but succeeds in riding away. He then goes to the brothel to find Maria but is beaten and ejected by the bouncers. Delirious and in pain, Kansas wanders until he collapses in a deserted building, where he is cared for by Maria and others for a week. Upon regaining consciousness, Kansas is told by a scornful Maria that she is attending the fiesta celebrating the movie. The director again gets hold of Kansas, and continuing to ply him with liquor, forces him to participate in the elaborate, semi-religious parade. That night, Kansas is locked in the movie set jail, in which the actor playing Billy the Kid had been held, and pleads with Maria to release him, as he believes that the villagers intend to shoot him for real during the recreation of Billy's death scene. Maria refuses, insisting that the filming is merely a game, and so Kansas begs her to summon the priest. The priest, realizing that the only way to win back his parishioners is to play along with them, also tells Kansas that nothing bad will happen and gets drunk with him. Kansas, seeking to "confess," laments that the movies have ruined the villagers and destroyed their innocence. In the morning, Kansas is half-dragged to the set by the director and the priest, and the priest comments that they need real blood so that it will show up better. Desperate and weary, wanting his ordeal to end, Kansas tells them to begin, and as filming commences, he runs through town, falling perfectly on the "mark" where Billy dies.