Dr. Peyton Westlake is developing a new type of synthetic skin to help burn victims, but cannot get past a flaw that causes the skin to rapidly disintegrate after 99 minutes. His girlfriend, attorney Julie Hastings, discovers the Belisarius Memorandum, an incriminating document that proves developer Louis Strack Jr. has been bribing members of the zoning commission. When she confronts Strack, he confesses, showing Julie that he plans to design a brand new city, creating a substantial number of new jobs. He warns Julie that the city’s reigning crime boss, Robert Durant, also wants the document.

At Westlake’s lab, Westlake and his assistant Yakatito are testing the skin when the lights go out. The synthetic skin is stable after 100 minutes; Westlake deduces the skin is photosensitive. Their joy is short lived as Durant and his mobsters show up and demand the Memorandum, which Westlake knows nothing about. They search for the document, and Durant has his men kill Yakatito and beat Westlake, burning his hands and dipping his face in acid. After finding the document, they rig the lab to explode; it does so as Julie watches. The blast throws a hideously burned Westlake through the roof and into the river. As a John Doe, he is brought to a hospital and subjected to a radical treatment which cuts the nerves of the spinothalamic tract; physical pain is no longer felt at the cost of tactile sensation. This loss of sensory input gives him enhanced strength due to adrenal overload and keeps his injuries from incapacitating him, but also mentally destabilizes him.

Believed dead by Julie, Westlake re-establishes his lab in a condemned building and begins a long process of digitization to create a mask of his original face. Westlake uses the time to plot revenge against Durant and his men; he kills Durant’s henchman Rick after forcing him to reveal the identities of the other men, then studies them to subdue and impersonate them (having a talent for impressionism). When his face mask is complete, Westlake manages to convince Julie that he was in a coma rather than dead. He mentions that he is aware of Julie seeing Strack after his supposed death; she responds that Strack only comforted her. Keeping his disfigurement from her, Westlake instead probes whether or not she would accept him, regardless of his appearance.

Westlake sows dissension and confusion among Durant’s henchmen by assuming their identities. On a date at a carnival with Julie, an altercation causes Westlake to lose his temper, revealing to Julie that something is wrong with him. He flees as his face begins to melt, and she follows him, discovering the discarded mask; she calls to Peyton that she still loves him regardless. Julie tells Strack she can no longer see him before discovering the stolen Memorandum on his desk, confirming he was collaborating with Durant the entire time. She reveals Westlake is still alive, but Strack tells her as long as he has the memorandum, no charges can be filed. When Julie leaves, Durant enters and is told to capture Julie and kill Westlake.

Durant intercepts Julie, kidnapping her before attacking Westlake’s lair. Two of his men enter the lab to locate and kill Westlake, but are outmaneuvered and eliminated. Durant flees in a helicopter with Westlake dangling from an attached cable, which he uses to crash the helicopter. Impersonating Durant, Westlake meets up with Strack and a captive Julie at the top of an unfinished building. Westlake’s ruse is broken by Strack and they fight; Westlake eventually gains the upper hand and dangles Strack by his ankle in the air. Strack says that killing him would not be something he could live with; Westlake drops Strack, and he falls to his death in the construction site below, remarking: “I’m learning to live with a lot of things.” Julie tries to convince Westlake that he can still return to his old life, but he tells her he has changed on the inside as well, and cannot subject anyone to his new, vicious nature. He rushes from Julie as they exit an elevator, pulling on a mask and running into a crowd of pedestrians. As Julie unsuccessfully searches for him, Westlake watches her for a few moments before turning and walking away, narrating, “I am everyone and no one. Everywhere. Nowhere. Call me … Darkman.”