In this unusual Argentine film directed by Lucia Puenzo and based on a short story by Sergio Bizzio, a 15-year-old who was born with both male and female sex organs must decide which gender to assume. Alex (Ines Efron) was born an intersex infant and her mother, Suli (Valeria Bertuccelli), decided not to have any early operations on her. To make life easier for Alex, her parents left Argentina and have taken up residence in a remote seaside town in Uruguay. Her father, Kraken (Ricardo Darin), is a marine biologist who has a special interest in endangered species. But trouble has dogged the family following Alex's fight with a local boy. Some wild youth follow her on the beach one day and grab her in a near rape scene where they try to inspect her anatomy. She is rescued by the boy whose eye she blackened.

To help clarify various medical options, Suli has invited Ramiro (German Palacios), a plastic surgeon from Buenos Aires, for a visit. He arrives with his wife Erika (Carolina Peleritti) and their 16-year-old son Alvaro (Martin Piroyansky). This complicates matters when Alex takes an interest in the shy visitor who isolates himself from others by going around with earphones on. Kraken does not get along with Ramiro and takes time to visit a local man who had a sex operation years ago and claims that his life is now in order with a wife and an adopted child.

XXY takes on a very difficult subject and manages to humanize Alex and her parents as they struggle with the confusion, humiliation, and alienation she feels when others make her feel like a "freak." She has stopped taking her pills, and her male tendencies are taking over. Alex's father notes this development and is shocked when he stumbles upon Alex and Alvaro having sex with his daughter playing the male role.

Director Lucia Puenzo has stated that after reading Bizzio's story about "the sexual awakening of a young girl who has what doctors call genital ambiguity, I couldn't get it out of my head. I began to write with that image in my head — the image of a young person with both sexes in the one same body. I was especially interested in the dilemma of the inevitable choice: not only having to choose between being a man or a woman, but also having to choose between that binary decision, or intersex as an identify and not as a place of mere passage."