On Christmas Eve 1988, NYPD detective John McClane arrives in Los Angeles, intending to reconcile with his estranged wife, Holly, at the Christmas party of her employer, the Nakatomi Corporation. McClane is driven to the party by Argyle, a limousine driver. While McClane changes clothes, the party is disrupted by the arrival of a ex-West German radical Hans Gruber and his team: Karl Vreski and his brother Tony, Theo, Franco, Alexander, Marco, Kristoff, Eddie, Uli, Heinrich, Fritz, and James. The group seizes the tower, disables communication to the outside world, and secures those inside as hostages except for McClane, who slips away, and Argyle, who gets stranded in the garage.
Gruber interrogates Nakatomi executive Joseph Takagi for the code to the building’s vault and reveals that he plans to steal $640 million in bearer bonds, with the terrorist act merely a distraction. Takagi refuses to cooperate and is killed by Gruber. McClane secretly watches, escapes, and sets off a fire alarm in an attempt to alert authorities. Eddie assures the fire department it is a false alarm. Gruber sends Tony to investigate. McClane kills Tony, pocketing his weapon and radio, which he then uses to alert the LAPD, who suspect McClane of making a prank call. Sgt. Al Powell is sent to investigate. Gruber sends Heinrich and Marco to stop McClane, who kills them both. Powell arrives, and finding nothing unusual, he prepares to leave, but McClane drops Marco’s corpse onto his patrol car to gain his attention. Powell summons the LAPD, who lay siege to the building. McClane steals Heinrich’s bag containing C-4 explosives and detonators.
James and Alexander use anti-tank missiles to disable a SWAT armored car before McClane drops C-4 attached to an office chair and computer down the elevator shaft, blowing up their floor and killing them. Holly’s coworker, Harry Ellis, attempts to mediate between Hans and McClane for the return of the detonators. McClane refuses, prompting Gruber to execute Ellis. While checking explosives attached to the roof, Gruber encounters McClane. Gruber masquerades as an escaped hostage; McClane offers him a gun and Gruber attempts to shoot McClane, but the gun is empty. Karl, Franco, and Fritz arrive; McClane kills Fritz and Franco but is forced to abandon the detonators.
FBI agents take command of the siege, ordering the building’s power shut off; this, as Gruber anticipated, disables the vault’s final lock. Gruber demands a helicopter on the rooftop for transport to the Los Angeles airport, but the FBI prepare to double-cross him by sending two helicopter gunships. McClane discovers that Gruber intends to detonate the explosives on the roof, faking the deaths of his team so they can escape with the bearer bonds. While making final preparations, Gruber sees a news report by intrusive reporter Richard Thornburg that features McClane’s children and deduces from a desk photo that McClane is Holly’s husband. The criminals order the hostages to the roof, but Gruber takes Holly with him to use against McClane, who subdues Karl in a fight before heading up to the roof. After killing Uli, he sends the hostages downstairs as the FBI helicopters appear and shoot at McClane, believing him to be a terrorist. Gruber detonates the explosives, destroying the roof and one helicopter; McClane barely survives.
Theo retrieves their getaway vehicle, an ambulance before Argyle rams it with the limo and knocks Theo unconscious. A weary McClane finds Holly with Gruber and his remaining men, Eddie and Kristoff. After knocking Kristoff unconscious, McClane confronts Gruber and is ordered to surrender his submachine gun. McClane does this to spare Holly but distracts Gruber and Eddie by laughing, allowing him to grab a concealed pistol taped to his back that contains two bullets. McClane wounds Gruber and kills Eddie; Gruber crashes through a window but grabs onto Holly’s wrist. Gruber makes a last-ditch attempt to kill the pair, but McClane removes Holly’s wristwatch, and Gruber falls to his death.
Outside, McClane and Holly meet Powell. Karl emerges and attempts to shoot McClane, but is killed by Powell. Argyle crashes through the parking garage door in the limo. Thornburg arrives and attempts to interview McClane, but Holly punches him before she and McClane leave the area with Argyle.