On 16 July 1988, a singularity destroys Tokyo. By 2019, Tokyo is rebuilt. Known as Neo-Tokyo, it is plagued by corruption, anti-government protests, terrorism, and gang violence and is on the verge of collapse. During a massive protest, the hot-headed Shōtarō Kaneda leads his vigilante bōsōzoku motorcycle gang against the rival Clown gang. Kaneda’s best friend Tetsuo Shima inadvertently crashes his motorcycle into Takashi, an esper (person with extrasensory perception) who escaped from a government laboratory with the aid of a resistance organization. The accident awakens psychic powers in Tetsuo, attracting the attention of a secret government project directed by Japan Self-Defense Forces Colonel Shikishima. Assisted by esper Masaru, Shikishima recaptures Takashi, takes Tetsuo with him, and arrests Kaneda and his gang. While being interrogated by the police, Kaneda meets Kei, an activist belonging to the resistance movement, and tricks the authorities into releasing her and his gang.
Shikishima and his head of research, Doctor Ōnishi, discover that Tetsuo possesses powerful psychic abilities similar to Akira, the esper responsible for Tokyo’s destruction. Takashi’s fellow esper Kiyoko forewarns Shikishima of Neo-Tokyo’s impending destruction. However, Neo-Tokyo’s parliament dismisses Shikishima’s concerns, leading him to consider killing Tetsuo to prevent another cataclysm.
Meanwhile, Tetsuo escapes from the hospital, steals Kaneda’s motorcycle, and prepares to flee Neo-Tokyo with his girlfriend, Kaori. The Clowns ambush them, but after a severe beating are rescued by Kaneda’s gang. During the intervention, however, Tetsuo begins suffering intense headaches and hallucinations, and he is returned to the hospital. Kaneda joins Kei’s resistance cell after overhearing their plan to rescue Tetsuo and the other espers.
At the hospital, the espers confront Tetsuo, and he aggressively fights back with his psychokinetic powers and escapes. These powers are beginning to make him egomaniacal and unstable. Kaneda, Kei, and the resistance group infiltrate the hospital and are drawn into Shikishima and the espers’ attempt to stop Tetsuo. He overpowers them all and flees the hospital after learning from Kiyoko that he can gain help from Akira, who is in cryonic storage beneath the Olympic Stadium construction site.
Kei and Kaneda escape military custody because of Kiyoko, who is hoping to stop Tetsuo using Kei as a medium. Shikishima stages a coup d’état against the Neo-Tokyo government and directs all of its military forces to destroy Tetsuo. Tetsuo returns to his gang’s former hangout, Harukiya Bar, to obtain drugs to control his powers. He murders the bartender and destroys the bar in the process. When his former friends Yamagata and Kai arrive and confront him, he cold-bloodedly slaughters Yamagata in front of Kai; Kaneda is informed by Kai of what happened and vows to avenge his friend. Tetsuo rampages through Neo-Tokyo, arriving at Akira’s cryogenic storage dewar under the stadium. Kiyoko has Kei fight Tetsuo, but he easily defeats her and exhumes Akira’s remains. Using a laser rifle, Kaneda fights Tetsuo in a duel, and Shikishima fires an orbital weapon at him, but both fail to stop him.
Shikishima and Kaori approach the stadium to find Tetsuo in great pain; Shikishima offers to return Tetsuo to the hospital, heal his injuries, and help control his abilities, while Kaori attempts to restrain Tetsuo. However, Kaneda arrives and duels with Tetsuo again. Unable to control his powers, Tetsuo mutates into a gigantic mass, consuming all matter, engulfing Kaneda and killing Kaori. As the mass grows, the espers awaken Akira to stop it. After reuniting with his friends, Akira creates another singularity that draws Tetsuo and Kaneda into another dimension. The espers teleport Shikishima to a safe distance as the singularity destroys Neo-Tokyo in a mirror of Tokyo’s previous destruction, and they agree to rescue Kaneda, knowing that they will not be able to return to this dimension as a result.
In the singularity, Kaneda experiences Tetsuo’s and the espers’ childhood, including Tetsuo’s dependence on Kaneda during their childhood, and how the children were trained and altered before Tokyo’s destruction. The espers return Kaneda to his world, informing him that Akira will take Tetsuo to safety and that Kei is developing psychic powers.
The singularity disappears, and water floods the city. Ōnishi is crushed to death when the laboratory collapses on him. Kaneda discovers that Kei and Kai have survived, and they drive off into the ruins, while Shikishima watches the sunrise. Finally, Tetsuo introduces himself at another unspecified level of existence.