The United States armed forces have a lead on a suspected terrorist in Baluchistan, but as the man is a recluse, getting a positive ID proves difficult, and the Department of Defense's computer system recommends that the mission be aborted. The Secretary of Defense (Michael Chiklis) agrees with the abort recommendation, but the President orders the mission be carried out anyway. This turns into a political backlash when all of the victims turn out to be civilians, and retaliatory suicide bombings target US citizens in response.

Jerry Shaw (Shia LaBeouf) is a Stanford University dropout who lacks direction and faces financial difficulty. He finds out that his more ambitious twin brother Ethan, an Air Force lieutenant with expertise in parallel algorithms and quantum electronics, is dead. Following the funeral in January 2009, he goes to withdraw some money from an ATM and is surprised to see that he has $750,000 in his account. When he returns home, he finds his apartment filled with a large number of weapons, explosives, and forged documents. He receives a phone call from an unknown woman, with a vaguely familiar voice (Julianne Moore), who explains that the FBI will apprehend him in thirty seconds and that he must escape.

Not believing her, he is caught by the FBI and sent to an interrogation room where he meets Special Agent Thomas Morgan (Billy Bob Thornton). When Morgan leaves the room to meet with Air Force Office of Special Investigations Special Agent Zoe Perez (Rosario Dawson), the unknown woman arranges Jerry's escape over a phone by a crane which hits the building. Jerry has escaped and the unknown woman has him join up with single mother Rachel Holloman (Michelle Monaghan). The unknown woman is coercing Rachel into assisting Jerry by threatening to kill her son, Sam, a trumpet player on his way to Washington, D.C., from Chicago for a band recital.

The woman helps the pair to avoid the Chicago Police and FBI units, demonstrating the ability to remotely control virtually any networked device, such as traffic lights that turns into green, cell phones, automated cranes, and even electrical wires. While Jerry and Rachel follow her instructions, the woman has other 'agents' (other people whom she has blackmailed) create a crystal explosive made into a necklace and its sound-based trigger placed inside Sam's trumpet. Jerry and Rachel are led from Chicago to Washington, D.C. via Kendall County, Indianapolis and Dayton, Ohio through various means. They reach a Circuit City electronics store to which the woman directs them. Over several television screens she introduces herself to them: she is a top secret supercomputer, the same one seen in the beginning of the film, called "Autonomous Reconnaissance Intelligence Integration Analyst" (ARIIA) (voiced by Julianne Moore) tasked with gathering intelligence from all over the world.

In light of the mistake made by the President at the beginning of the film, ARIIA has decided that the executive branch is a threat to the public good and must be eliminated. ARIIA plans to destroy the President's cabinet, and calls this Operation Guillotine. She has decided to leave the Secretary of Defense -- who had agreed with her recommendation to abort the mission -- as the successor to the presidency. ARIIA does not reveal this to Jerry or Rachel, merely explaining that she is trying to help the people of the United States.

At the Pentagon, where ARIIA is housed, Agent Perez discovers that Jerry's late brother, Ethan, worked as a technician for the computer and locked it down to prevent ARIIA from carrying out her plan. Perez warns the Secretary of Defense and they discuss the situation in a sealed room to prevent ARIIA from hearing their conversation. Jerry and Rachel arrive at the Pentagon and are led to the supercomputer, where ARIIA forces Jerry to impersonate Ethan and use his own biometrics to override the lockdown, allowing her to go ahead with the plan.

ARIIA shows Jerry CCTV footage displaying Ethan's fatal car crash, explaining that she orchestrated his death because he was a threat to her plans. ARIIA then instructs Rachel to eliminate Jerry to prevent the lock from being reinstated, but Rachel cannot bring herself to do it. Rachel is led out of the building, when ARIIA calls in some guards, while Jerry is caught by Agent Morgan. Having been warned by Agent Perez, Morgan believes Jerry's story and takes him to the United States Capitol. ARIIA sends a MQ-9 Reaper UCAV after them. They barely escape the drone's first pass, and Agent Morgan sacrifices himself to destroy the drone and save Jerry. Meanwhile, Agent Perez returns to the supercomputer and destroys it by draining out the cooling fluid.

Rachel is unknowingly given the explosive necklace by an official who was also coerced by ARIIA and Rachel is sent to the Capitol to watch the President's speech where she is left to die along with her son and the presidential staff. Sam's class, whose recital has been moved from the Kennedy Center to the Capitol for the President's State of the Union Address, begins to play. The trigger that will set off the explosive necklace is set to activate when Sam plays a sustained "high F" on his trumpet corresponding to the word "free" in the last stanza of the U.S. national anthem, as ARIIA had arranged this as poetic justice, believing the president to not be brave. Jerry successfully gains entry dressed as a Capitol policeman and fires his pistol into the air, stopping the performance just before the deadly note. Jerry is then shot several times by a confused Secret Service agent.

In a hearing after the chaos ARIIA caused, the Secretary of Defense urges that another supercomputer should not be built: "sometimes the very measures we put into place to safeguard our liberty become threats to liberty itself," he cautions them. Ethan posthumously receives the Medal of Honor and Agent Morgan posthumously receives the Commendation Medal, while Jerry, injured but alive and well, receives the Congressional Gold Medal.[verification needed] The film ends with Jerry attending Sam's birthday party. Rachel thanks him for attending, which her ex-husband had never done, and kisses him on the cheek. She then tells Jerry that she's glad he's there. He then responds, "Me too".