At up and coming Krush Groove Records in New York City, rap artists “Run-DMC” records an album. High school rappers, the “Disco Three,” made up of Prince Markie D., Kool Rock Ski, and the Human Beat Box, hear their song on the radio, and dream of following in Run-DMC’s success. The boys are sent to the principal’s office for misbehaving in class, but instead perform an impromptu rap in the hallway for their classmates. After receiving an order for 10,000 copies of his brother “Run” Walker’s record, Krush Groove founder, Russell Walker, asks his father, Reverend Walker, for $5,000 to invest in his fledgling company. Reverend Walker denies him the loan, and suggests that God is testing him to solve his own problems. Later, Russell, Run, and DMC attend a performance by Sheila E., and Russell is approached by a businessman named Jay B., who offers to help him. However, club owner, Sal, warns Russell to stay clear of the man. Run invites Sheila to join him and DMC for a drink, and when Russell is introduced to Sheila, they become infatuated. Outside the club, the underage “Disco Three” are denied entrance. They convince the bouncer to allow them inside to perform, but the boys leave when they cannot afford the $10 dollar cover charge. Sometime later, Russell and his business partner, Rick, apply for a bank loan, but are denied. Russell secretly visits Jay B. and procures the money, but does not tell Rick where it came from. The records of Run-DMC and fellow Krush Groove artist, Kurtis Blow, become hits, and Krush Groove gains success. Russell is offered $20,000 by Terri Beiker to sell his artists to Galaxy Records, but he turns the offer down. At a Run-DMC performance, Run invites Sheila E. onstage to help promote her career. Russell is not pleased with the unplanned performance, although the audience responds enthusiastically. Run and Russell argue, and Russell orders his brother to take the stage. The rift continues after the show, and Run takes another blow when Sheila denies his advances, saying he is more like a brother to her. Sheila then tells Russell there is nothing romantic between her and Run, and Russell offers to drive her home. Outside the club, Run is courted by Beiker to come to the more successful Galaxy Records. Run is upset when he sees Sheila and Russell leaving together. Meanwhile, the Disco Three enter a talent contest with a chance to win a Krush Groove recording deal. Run reports to the others at the record company that Russell turned down a lucrative contract with Galaxy Records without discussing it with anyone. At the talent contest, Jay B. demands repayment from Russell, who is given a week to comply. As the Disco Three perform, Russell speaks to Beiker, and agrees to accept the deal for more money. However, Beiker informs him that he has already signed Run-DMC to Galaxy Records. Having no signed contract, Russell has no rights to Run-DMC. Run enters, and Russell physically attacks his brother. The finalists of the talent contest are announced, and the Disco Three is not among them. However, Kurtis Blow offers them a chance to perform as alternates in case other performers fail to attend the finals. Later, Kurtis visits Russell and admits he was also offered a contract with Galaxy Records. Russell tells him to accept the $500,000 deal, as Krush Groove is struggling. The Disco Three changes their name to the more fitting “The Fat Boys.” After losing his artists to Galaxy Records, Russell realizes he can save his company by recording Sheila, and repaying Jay B. Later, Sal refuses to play Sheila’s record in his club because he fears involvement with Jay B. At the finals for the talent contest, a group drops out, and The Fat Boys take their place. The crowd responds, and the group wins first prize. Russell struggles to get Sheila’s record played in clubs, and is beaten up by Jay B.’s henchmen. When he seeks shelter at Sheila’s home, the two make love. Despite his new financial success, Kurtis feels guilty for leaving his longtime friend, Russell, and fails to convince Run that they should team up with Russell again. Run visits Sheila, and she pleads with him to help Russell with his money troubles, but Run’s jealousy makes him reluctant. Sheila reprimands his selfish behavior, and Run goes to see Russell, finds him being beaten by Jay B.’s men, and is also punched when he tries to intervene. The henchmen threaten to return everyday until they receive full payment. Run apologizes to his brother, and gives him the money to repay Jay B. He asks Russell to be his manager at Galaxy Records. Later, everyone meets at Sal’s club to celebrate The Fat Boys’ win, and the reuniting of Russell with Run-DMC and Kurtis Blow. All of the artists, including Sheila, perform a song.