In this essay I consider and reject as inadequate two rival interpretations of the Coen brothers' film Fargo, which I characterize respectively as “moralistic” and “ironic.” Whereas the moralistic interpretation seeks to locate a moral within the film, the ironic interpretation (at least in its more extreme versions) denies that the film has an affirmative ethical point. I agree with the ironic reading that a moral cannot be found within the storyline, but I disagree that it follows that the film cannot be understood morally. Drawing for inspiration upon elements of ethical theory and the writings of Flannery O’Connor, I introduce a third way of understanding the movie -- namely, as a work of grotesque, in which even the good characters are represented as freakish versions of themselves. Each of these three readings implies a certain background hermeneutic -- a particular placement of the viewer in relation to the film. Each interpretation thus says something not merely about the movie, but about the interpreter. The interpretation I advance here depends upon the availability of a conception of wholeness or goodness which illuminates but which, of necessity, cannot appear within the storyline itself. The film, I argue, gestures beyond itself, toward a reality that appears only negatively in its characters.