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In 1985, in a suburb south of Boston, John Bennett (Bretton Manley) is a lonely kid who dearly wishes for his new Christmas gift, a large teddy bear he names Teddy ("Ted"), to come to life to be his best friend. The wish succeeds with a falling star one night, and Ted (Zane Cowans) becomes fully alive. In 2012, John (Mark Wahlberg) and Ted (voiced and motion captured by Seth MacFarlane), now living in the South End neighborhood of Boston, are still staunch, if immature, friends enjoying a hedonistic life, even while John is pursuing a 4-year-long relationship with a level-headed office worker named Lori Collins (Mila Kunis). Lori hopes to marry John, but she feels that he cannot move ahead with his life with Ted around, who is now a dirty, vulgar, obnoxious wastrel. John is resistant to kicking Ted out, but he is finally persuaded that night to act when he and Lori discover Ted at home with four prostitutes, one of whom has defecated on the floor during a game of Truth or Dare.