In the 1950s, Margaret Ulbrich leaves her then-husband and takes her young daughter Jane to North Beach, San Francisco, where she gets a job painting illustrations at a furniture factory. While doing portraits at an outdoor art show, she meets Walter Keane, who sells paintings of Parisian street scenes but makes his money in real estate. They soon become close friends. Margaret is distraught when her husband asks for custody of Jane as part of the divorce settlement. Walter proposes, and they marry and honeymoon in Hawaii. She retains custody of Jane.

Unable to get his or Margaret's paintings into a fine art gallery, Walter convinces Enrico Banducci, the owner of a popular jazz club, to rent him some wall space to exhibit their work. He is frustrated when the designated space is in the back by the bathrooms.