The man who will become the Joker is an unnamed engineer who quits his job at a chemical company to become a stand-up comedian, only to fail miserably. Desperate to support his pregnant wife Jeannie, he agrees to guide two criminals through the chemical plant where he previously worked so that they can rob the playing card company next to it. During the planning, the police inform him that his wife has died in a household accident. Grief-stricken, the engineer tries to withdraw from the plan, but the criminals strong-arm him into keeping his commitment to them.
At the plant, the criminals make him don a special mask to become the infamous Red Hood. Unknown to the engineer, the criminals plan to use this disguise to implicate any accomplice as the mastermind and to divert attention away from themselves. Once inside, they encounter security personnel, a shootout ensues, and the two criminals are killed. The engineer is confronted by Batman who is investigating the disturbance.
Terrified, the engineer jumps into the chemical plant’s waste pound lock to escape Batman and is swept through a pipe leading to the outside. Once outside, he discovers to his horror that the chemicals have permanently bleached his skin chalk-white, stained his lips ruby-red and dyed his hair bright green. The engineer’s disfigurement, compounded with the loss of his family, drives him completely insane and marks the birth of the Joker.
In the present day, Batman goes to Arkham Asylum to talk with the Joker about ending their years-long feud, only to realize that the Joker has escaped and put a decoy in his place. Soon after, the Joker shoots Barbara Gordon in the stomach, paralyzing her, and kidnaps her father, Commissioner James Gordon. The Joker imprisons Gordon in a run-down amusement park. His henchmen then beat Gordon and cage him in the park’s freak show. It is implied but not explicitly said that the Joker gives Gordon LSD to continue his mental torture. The Joker chains Gordon to one of the park’s rides and forces him to view giant photos of Barbara, lying down naked, bloodied, and in pain. Once Gordon has run the horrifying gauntlet, the Joker puts him on display in the freak show, ridiculing him as “the average man,” a naïve weakling doomed to insanity.
Batman’s attempts to locate Commissioner Gordon are unsuccessful until the Joker sends him an “invitation” that leads him to the amusement park. Batman arrives to save Gordon, and the Joker retreats into the funhouse. Though traumatized by the ordeal, Gordon retains his sanity and moral code, and he insists that Batman capture the Joker “by the book” in order to “show him our way works”. Batman enters the funhouse and dodges the Joker’s booby traps, while the Joker tries to persuade his nemesis that the world is “a black, awful joke” that is not worth fighting for, and that it only takes “one bad day” to drive an ordinary man insane.
Batman subdues the Joker and tells him that Gordon survived the Joker’s torments, and suggests that the Joker is alone in his madness. He attempts to reach out to the Joker and offers to help him recover in order to end their everlasting war, which Batman fears may one day result in a fight to the death. The Joker declines, saying it is too late… “far too late”. He then says that this situation reminds him of a joke about two inmates in a lunatic asylum who try to escape. One inmate jumps across a narrow gap between the asylum and the adjoining building, but the other is afraid he’ll fall. The first inmate offers to shine his flashlight across the gap so the other can walk across it, but the second inmate replies, “What do you think I am, crazy? You’d just turn it off when I’m halfway across!” Batman chuckles at the punch line, and the two old foes laugh as the police arrive.
From the text itself, the ending is ambiguous: according to one view, Batman breaks the Joker’s neck out of panel, causing the laughter to stop abruptly. Some people theorise that the title, “The Killing Joke” is in reference to the ending scene, in which The Joker and Batman laugh, over a joke, thus triggering Batman to kill The Joker. According to another view, Batman and the Joker, who have been fighting for years, end all of their disputes by having a good laugh about it all. Still another theory maintains that the first and last panels of the book are both purposely of rain falling on the ground, which symbolizes that nothing has changed except for the two parties’ respect for each other.
Though many people, fans and critics alike, have debated each of these theories, the ending was purposely left uncertain to allow each individual reader to decide what happened.