Retired school teacher and widower John Gustafson and former TV repairman and widower Max Goldman are former childhood friends and longtime next-door neighbors in Wabasha, Minnesota. Their rivalry began decades earlier when John had “stolen” Max's high school sweetheart, May, with whom John went on to marry and have two children with, daughter Melanie and son Brian. Max went on to marry a woman named Amy, with whom he had his son Jacob. Despite their differences, both men lead similar boring and lonely single lives, and share a mutual love of the Minnesota winter pastime of ice fishing, as well as competing, arguing, insulting, and pulling cruel practical jokes on each other whenever possible. A subplot of the film involves John's ongoing issues with the Internal Revenue Service (IRS), owing thousands in back taxes, and his desperate attempts to avoid field agent Elliot Snyder.
The vacant house across the street is being moved into, but neither Max or John know who the new neighbor is until both are awakened at 1:30 AM by the sound of a snowmobile racing up and down the street. They see their beautiful new neighbor is college professor Ariel Truax, who quickly becomes the talk of the town with her exuberant lifestyle and bizarre tactics to get to know her new neighbors. Their mutual lifelong friend Chuck , who owns the lakeside bait shop, advises that they take advantage of the opportunity, as does John's 94-year old father, John Sr. (Grandpa Gustafson). Midway to the movie, John learns about Chuck's death and scolds Max when he mistakenly assumes that he's grieving for the loss of his chance with Ariel.
Ariel spends more time with John due to their shared professions as teachers and love for playing chess. The next day, he finally returns the beloved fishing rod his father found while fishing by putting it outside of Max's fishing shack. However, Max gets jealous that he's losing Ariel to John and intentionally pushes his ice fishing shack into the icy lake with his car. This leads to a confrontation when an offended John confronts him for the misdeed. Max accuses him of stealing Ariel away from him like he did with his sweetheart, May. John mentions that unlike Ariel, she wasn't worth anything and thinks he's an idiot for believing different. He reveals that he was unhappily married to May for 20 years and was actually saving Max from making a huge mistake. John tells him off that had he married May, Max would never had met Amy and had a happy marriage. Max agreed with him that she was the best thing in his life, but still couldn't forgive John for stealing May from him and can't wait for another Ariel to come in his life. John Sr. shows up to break up the fight and tells both men to get along.
That night, John decides to let Max win for once, but it leaves him in a severe depression since he fallen in love with Ariel. This came to head during Christmas Eve dinner with Melanie, her daughter, Allie and her estranged husband, Mike(whom John wasn't fond of). After Jacob's visit, John tells Melanie what he thinks about Mike and tells her that she needs to go through with the divorce or she'll never be happy again. Jacob convinces Max to reconcile with John and end their feud for once. At a bar, Max thanks him for finding his beloved fishing rod, but John isn't in the mood. He reveals that he's depressed because he has fallen in love with Ariel and thinks Max couldn't understand how he felt in having to let her go. John leaves the bar, but Max follows him wanting to know why he let him win for once. John suffers a heart attack and Max helps get him to a hospital. Realizing how much he loves Ariel, Max convinces her to visit John at the hospital and reconcile with him.
As John is recovering well, Max learns about the debt he owes to the IRS and realizes that Snyder is being a bully in wanting to sell his house just so he can collect the money. He uses tools and plywood to barricade the doors so Snyder and the others can't get in. Max also manages to sneak a fish in to Snyder's car and convinces Jacob to help John get an extention so he can pay off the debt and keep his house. Melanie goes through with the divorce and starts a relationship with Jacob. John marries Ariel, but is on the receiving end of Max's prank. Max decides to go to the VFW to find a date for a New Years Eve party hosted by the Daughters of the American Revolution.
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