Songwriter Jack Morell (a reference to Village People creator Jacques Morali) gets a break DJing at local disco Saddle Tramps. His roommate Samantha "Sam" Simpson, a supermodel newly retired at the peak of her success, sees the response to a song he wrote for her ("Samantha") and agrees to use her connections to get him a record deal. Her connection, ex-boyfriend Steve Waits, president of Marrakech Records (a reference to Village People record label Casablanca Records), is more interested in getting back with her than in Jack's music (and more interested in taking business calls than in wooing Samantha), but agrees to listen to a demo.

Sam decides Jack's vocals won't do, and recruits neighbor and Saddle Tramps waiter/go-go boy Felipe Rose (the Indian), fellow model David "Scar" Hodo (the construction worker, who daydreams of stardom in the solo number "I Love You to Death"), and finds Randy Jones (the cowboy) on the streets of Greenwich Village, offering dinner in return for their participation. Meanwhile, Sam's former agent Sydney Channing orders Girl Friday Lulu Brecht to attend, hoping to lure the star back. Ron White, a lawyer from St. Louis, is mugged by an elderly woman on his way to deliver a cake Sam's sister sent, and shows up on edge. Brecht gets Jack high, which unnerves him when her friend Alicia Edwards brings singing cop Ray Simpson, but Jack records the quartet on "Magic Night". Ron, pawed all night by the man-hungry Brecht, is overwhelmed by the culture shock of it all and walks out.

The next day, Sam runs into Ron, who apologizes, proffers the excuse that he's a Gemini, and follows her home. Spilling leftover lasagne on himself, Sam and Jack help him off with his trousers before Jack leaves and Sam and Ron spend the night. Newly interested in helping, Ron offers his Wall Street office to hold auditions. There, Glenn M. Hughes, the leatherman climbs atop a piano for a rendition of "Danny Boy", and he and Alex Briley, the G.I. join up. Now a sextet, they get their name from an offhand remark by Ron's socialite mother Norma. Ron's boss, Richard Montgomery, overwhelmed by the carnival atmosphere, insists the firm not represent the group, and Ron quits.

Ron's new idea for rehearsal space is the YMCA (the ensuing production number "YMCA" features its athletic denizens in various states of undress—the film is one of the few PG-rated offerings to feature full-frontal male nudity). The group cut a demo ("Liberation") for Marrakech, but Steve sees limited appeal and Sam refuses his paltry contract. Reluctant to use her savings, they decide to self-finance by throwing a pay-party.

To bankroll the party, Sam acquiesces to Channing's plea to return for a TV ad campaign for milk, on the condition the Village People are featured. The lavish number "Milkshake" begins as Sam pours milk for six little boys in the archetypal costumes with the promise they'll grow up to be the Village People. The advertisers want nothing to do with such a concept, and refuse to air the spot. Norma then steps in to invite the group to debut at her charity fundraiser in San Francisco. Sam lures Steve by promising a romantic weekend but Ron is taken aback by the inference that she'd go through with the seduction, and Sam breaks up with him. On his private jet, Steve prepares for a tryst, but it's Jack and his former chorine mother Helen who show up, to hash out a contract. Initially reluctant, Helen seduces Steve with her kreplach and before long they're negotiating the T-shirt merchandising for the Japanese market.

In the dressing room before the show, Ron is relieved to learn Sam didn't travel with Steve—and proposes. At one point, Montgomery shows up to rehire Ron as a junior partner representing the group. Following a set by The Ritchie Family ("Give Me a Break"), the Village People make a triumphant debut ("Can't Stop the Music").

ensions between Walker and Valerie Perrine rose on the set to the point that Walker would not be present for scenes featuring Perrine, leaving director of cinematography Bill Butler to direct in her place.[7]

Producer Allan Carr was coming off a massive worldwide hit with the pop musical Grease when shooting began in May 1979 at the height of the disco craze. Carr took a hands-on role with the production, and personally directed and cast the extras for the "Y.M.C.A." musical sequence.[7]

The band's silver and white costumes in the "Milkshake" sequence and red costumes in the finale sequences were designed by Tony- and Oscar-winning[8] designer Theoni V. Aldredge.

Two of the band's three biggest hits — "In the Navy" and "Macho Man" — do not appear in the film, though in reference to the latter, Perrine wears a T-shirt emblazoned with the words "Macho Woman" as she jogs through the men's locker room at the YMCA.

The film was shot at MGM Studios in Culver City, California, with location shooting in New York City and San Francisco. Location shooting in New York was somewhat complicated by adjacent protests by gay activists over the Al Pacino film Cruising, which was filming on location nearby.[7] The two productions were mistaken for each other more than once, with protestors disrupting the Can't Stop the Music location shoots when they intended to halt production of Cruising.[7] A few weeks prior to release, Jenner and Perrine hosted a TV special, Allan Carr's Magic Night, to promote the film.

By the time of the film's release during the summer of 1980, the disco genre had not only peaked in the United States but also was experiencing a backlash there. (During the production, Carr, suspecting that something like that might happen, as it did, had already changed the film's title from the original Discoland--Where The Music Never Stops. The eventual title of Can't Stop The Music was an homage to Jacques Morali's Can't Stop Productions.) The film received scathing reviews and audiences stayed away. The soundtrack album was better received, going top 10 in the UK. The film did well in Australia, where the world premiere preview was shown at the Paramount Theatre, Sydney on Sunday 1 June 1980. The after party was held at Maxy's. At a cost estimated at $20 million, the film was a colossal failure financially, bringing in only a tenth of that in gross revenue.[9]

Carr's next film, Grease 2, brought in more than twice as much on its opening weekend as this film grossed in its entire run. Even though it was considered a failure, Grease 2 nearly made back its investment in the U.S. gross alone.[10]

Since its initial failure, the film has gained something of a cult status as a camp film. Released on DVD in 2002, the film has been screened at gay film festivals, including the 2008 London Lesbian and Gay Film Festival, and is an annual New Year's tradition on Australian television.[11]