Elwood P. Dowd is an amiable but eccentric man whose best friend is an invisible 6 ft 3.5 in (1.918 m) tall white rabbit named "Harvey". As described by Elwood, Harvey is a pooka, a benign but mischievous creature from Celtic mythology. Elwood spends most of his time taking Harvey around town, drinking at various bars and introducing Harvey to almost every person he meets, much to the puzzlement of strangers, though Elwood's friends have accepted Harvey's (supposed) existence. His older sister Veta and his niece Myrtle Mae live with him in his large estate, but have become social outcasts along with Elwood due to his obsession with Harvey.
After Elwood ruins a party Veta and Myrtle Mae had arranged in secret, Veta finally tries to have him committed to a local sanatorium. In exasperation she admits to the attending psychiatrist, Dr. Lyman Sanderson, that she sees Harvey every once in a while herself. Mistaking Veta as the real mental case, Sanderson has Elwood released and Veta locked up. Dr. Chumley, head of the sanatorium, discovers the mistake and realizes he must bring Elwood back, searching the town with orderly Marvin Wilson. With Veta's help, Chumley eventually tracks Elwood to his favorite bar, "Charlie's", and decides to confront him alone.
Four hours later, Marvin returns to the sanatorium, but learns from Sanderson and nurse Kelly that Chumley has not returned with Elwood. They arrive at Charlie's and find Elwood alone, who explains that Chumley had wandered off with Harvey after several rounds of drinks. When asked, Elwood explains that he met Harvey one night several years ago after escorting a drunk friend to a taxi, and they had since enjoyed going to bars and socializing with other patrons to hear their grand life stories and aspirations. Convinced Elwood is crazy and may have harmed Chumley, Marvin calls the police and has Elwood escorted back to the sanatorium.
Chumley returns to the sanatorium disheveled and paranoid, and is followed by an invisible presence. When the others arrive, Chumley invites Elwood to his office. In private, Chumley is convinced Harvey is real, and Elwood explains his various powers, namely his ability to stop time and send anyone to any destination for as long as they like. Veta arrives with Judge Gaffney and Myrtle Mae, prepared to sue the institute and commit Elwood, but are convinced by Sanderson that an injection of a serum called "Formula 977" will stop Elwood from "seeing the rabbit". As they prepare the injection, Veta tries to pay the cab driver but is unable to find her coin purse, prompting Elwood to help pay him. Warmed by Elwood's kindness, the cab driver explains how he has driven many people to the sanatorium to receive the same medicine, warning Veta that Elwood will soon become "just a normal human being, and you know what stinkers they are." Veta is upset by this and halts the injection; she then finds her coin purse, realizing Harvey had intervened to save her brother.
Leaving with Veta and Myrtle Mae, Elwood finds Harvey, who decides to stay with Chumley so that he can take him on his fantasy trip to Akron. Elwood walks out the gates downtrodden, but suddenly finds Harvey has returned to him. Harvey and Elwood reaffirm their friendship as they follow Veta and Myrtle Mae into the sunrise.
James Stewart as Elwood P. Dowd
Josephine Hull as Veta Louise Dowd Simmons
Peggy Dow as Miss Kelly
Charles Drake as Dr. Lyman Sanderson
Victoria Horne as Myrtle Mae Simmons
Jesse White as Marvin Wilson, orderly
Cecil Kellaway as Dr. William Chumley
William H. Lynn as Judge Omar Gaffney
Dick Wessel as Bartender Mr. Cracker
Nana Bryant as Mrs. Hazel Chumley
Grayce Mills as Aunt Ethel Chauvenet
Clem Bevans as Herman Shimmelplatzer, gatekeeper
Harry Hines as Mr. Meegles
Norman Leavitt as Henry, first cab driver
Wallace Ford as E.J. Lofgren, second cab driver
Sam Wolfe as Minninger, Gaffney's law clerk
"Harvey as Himself" (This credit appears on-screen, and is the final shot of the film.)
Maudie Prickett as Elvira the cook (uncredited)
based on Mary Chase's 1944 play of the same name
Remade as a made-for -tv movie in 1996 (though this is the original movie).