New York City law student and gifted poker player Mike McDermott (Matt Damon) dreams of winning the World Series of Poker. At an underground Texas hold ’em game run by Russian mobster Teddy “KGB” (John Malkovich), an overconfident Mike loses his entire $30,000 bankroll in a single hand. Shaken, he promises his girlfriend and fellow student Jo (Gretchen Mol) he has quit poker, and concentrates on law school. His mentor Joey Knish (John Turturro) offers to stake him to rebuild his bankroll but Mike declines, and instead accepts a part-time job to make ends meet.

Several months pass and Mike stays true to his promise until his childhood friend Lester “Worm” Murphy (Edward Norton) is released from prison. While Mike is an honest player, Worm is a hustler and unapologetic cheat. To help Worm pay off a debt, Mike sets him up with games across town, and reluctantly sits in on a game, interfering with his studies and his relationship with Jo. Mike allows Worm to play on his credit at the Chesterfield Club; however, Worm takes out $10,000 and begins a tab in Mike’s name. Worm runs into Grama (Michael Rispoli), a dangerous pimp, who has bought Worm’s debt – Worm now owes $25,000 directly to Grama, who is working for KGB. Grama takes Worm’s $10,000, threatening him to pay the rest. As Mike returns to his poker lifestyle and friends, Jo ends their relationship.

Mike learns from Petra (Famke Janssen) at the Chesterfield that Worm has racked up a $6,000 debt in Mike’s name. In Atlantic City, Mike also learns of Worm’s debt to Grama. Mike proposes to Grama that Worm pay weekly installments; Grama considers the offer but also mocks Worm’s inability to pay him. Worm responds by insulting Grama and as the two nearly come to blows. Mike defuses the situation by agreeing to vouch for Worm and an angry Grama gives them five days to pay the remaining $15,000. Mike decides to help Worm win the money by playing in several games in and around the city.

On a winning streak, Mike earns $7,200 in three days, but still needs to double it in 48 hours. Worm directs Mike to an out-of-town game hosted by New York state troopers, where he wins almost the full $15,000 before Worm unexpectedly joins the game. The officers catch Worm base-dealing to help Mike; they are beaten up and relieved of their entire winnings. Worm confesses that Grama is working for KGB. With their lives in danger, Worm decides to flee, but Mike returns to the city, cutting ties with Worm.

Mike asks Grama for more time, to no avail. Mike asks Knish for the money but is refused out of principle. During the conversation with Knish, Mike reveals his motivation for taking the ill-fated risk at KGB’s club and why he thinks he can compete and possibly win the World Series of Poker. He even quotes Worm saying that Knish “sees all the angles but doesn’t have the stones to play any” after Knish had already refused to help financially. Desperate, Mike asks his law school professor Petrovsky (Martin Landau), who loans him $10,000. Mike challenges KGB to a second heads-up, No-Limit Texas Hold’em game for the remaining debt, with winner-take-all stakes, which KGB accepts. Mike beats KGB in the first session, winning $20,000. KGB offers to let Mike’s winnings “ride” and continue the game, but Mike – with enough to pay off most of his debts – declines. As he is about to leave, KGB taunts Mike that he is paying him with the money he lost to KGB from their previous game. Mike changes his mind and decides to continue playing.

Mike doubles the blinds at the risk of losing everything to KGB again, and possibly his life. As the night wears on, Mike spots KGB’s tell and folds, deducing KGB has a better hand. Irate at the missed chance to win it all, KGB begins to play on “tilt”. In the final hand, Mike baits a boastful KGB into going all-in, and defeats him with a nut straight. KGB throws a tantrum at having been lured into a mistake. Despite Grama’s urging, KGB, rattled, calls off his goons and admits Mike won fairly, allowing him to leave with his winnings.

With over $60,000, Mike settles Worm’s $15,000 debt to Grama, the Chesterfield’s $6,000 credit, Petrovsky’s $10,000 loan, and restores his original bankroll of “three stacks of high society.” Mike drops out of law school, says goodbye to Jo, and leaves New York for Las Vegas to play in the World Series of Poker.