On Christmas Eve, New York City Police Detective Lieutenant John McClane arrives in Los Angeles to reconcile with his estranged wife, Holly. McClane is driven to the Nakatomi Plaza building for a company Christmas party by Argyle. While McClane changes clothes, the party is disrupted by the arrival of Hans Gruber and his heavily armed group: Karl, Franco, Tony, Theo, Alexander, Marco, Kristoff, Eddie, Uli, Heinrich, Fritz, and James.
The group seize the tower and secure those inside as hostages except for McClane who manages to slip away.
Gruber singles out Nakatomi executive Joseph Takagi claiming he intends to teach the Corporation a lesson for its greed. Away from the hostages, Gruber interrogates Takagi for the code to the building's vault. Gruber admits that they are using terrorism as a distraction while they attempt to steal $640 million in bearer bonds in the vault. Takagi refuses to cooperate and is executed by Gruber as McClane secretly observes.
McClane accidentally gives himself away and is pursued by Tony. McClane manages to kill Tony, taking his weapon and radio, which he uses to contact the Los Angeles Police Department (LAPD). Sgt. Al Powell is sent to investigate, while Gruber sends Heinrich and Marco to stop McClane. Powell, finding nothing strange about the building, attempts to leave, but McClane drops Marco's corpse onto Powell's car, alerting the LAPD who surround the building. McClane takes Heinrich's bag containing C-4 explosives and detonators.
A SWAT team assaults the building, but the attack is anticipated, and James and Alexander massacre the SWAT team with rockets. McClane uses the C-4 to blow up the building floor occupied by James and Alexander, killing them both. Holly's coworker Harry Ellis attempts to mediate between Hans and McClane for the return of the detonators. McClane refuses to return them, causing Gruber to execute Ellis.
While checking the explosives attached to the roof, Gruber is confronted by McClane. Gruber passes himself off as an escaped hostage and is given a gun by McClane. Gruber attempts to shoot McClane but finds that the gun is unloaded. Before McClane can act, Karl, Franco, and Fritz arrive. McClane kills Fritz and Franco, but is forced to flee, leaving the detonators behind.
FBI agents arrive and take command of the police situation outside, ordering the building's power be shut off. The power loss disables the vault's final lock as Gruber had anticipated. Gruber demands that a helicopter arrive on the roof for transport—his intention is to detonate the explosives on the roof to kill the hostages and to fake the deaths of his men and himself.
Karl finds McClane and the two fight. Meanwhile Gruber views a news report by Richard Thornburg that features McClane's children, causing Gruber to realize that McClane is Holly's husband. The terrorists order the hostages to the roof, but Gruber takes Holly with him to use against McClane. McClane seemingly kills Karl and heads to the roof. He kills Uli and sends the hostages back downstairs before the explosives detonate, destroying the roof and the FBI helicopter.
Theo goes to the parking garage to retrieve their getaway vehicle but is knocked unconscious by Argyle who had been trapped in the garage during the siege. A weary McClane finds Holly with Gruber and his remaining men and knocks Kristoff unconscious. McClane surrenders his machine gun to spare Holly, but then distracts Gruber and Eddie by laughing, allowing him to grab a concealed handgun taped to his back.
McClane shoots Gruber in the shoulder and then kills Eddie. Gruber is sent crashing through a window. Gruber prevents himself from falling by holding onto Holly by her watch. McClane manages to release the watch and Gruber falls to his death on the street below.
McClane and Holly are escorted from the building and meet Powell in person. Karl emerges from the building disguised as a hostage and attempts to shoot McClane, but he is gunned down by Powell. Argyle crashes through the parking garage door in the limo. Thornburg arrives and attempts to interview McClane, but is punched by Holly. McClane and Holly are driven away by Argyle.