TV news reporter Kimberly Wells (Jane Fonda) and her freelance cameraman Richard Adams (Michael Douglas) visit the Ventana nuclear power plant outside Los Angeles as part of a series of news reports on energy production. Kimberly is an ambitious reporter who wants to become a "hard news" reporter, however, her superiors seem to be holding her back due to inexperience at reporting hard news and perhaps because she's a woman. As such, Kimberly reports stories of local interest that contain little substance.
While watching the Ventana control room from an observation area with public relations officer, Bill Gibson, the plant goes through a reactor SCRAM, a temporary shutdown of part or all of the plant. Shift supervisor Jack Godell (Jack Lemmon), initially believing the SCRAM to be standard, notices what he believes to be an unusual vibration during the SCRAM. On the control console, a chart recorder indicates that the water level in the reactor core has risen to an abnormally high level. The crew begins opening relief valves in an effort to prevent too much water from damaging the plant, but the chart continues to indicate an off-scale level. Minutes later a crew member notices an alternate gauge on the control panel showing that the water level is dangerously low. Suspecting that the recorder pen may be stuck, Godell taps on the glass cover. He and crew chief Ted Spindler (Wilford Brimley) watch, sickened, as the pen trace rapidly drops to show that the water level is now mere inches away from exposing the reactor core, and still falling. The staff scrambles to close the relief valves and restore the coolant systems, but for several agonizing minutes no one knows whether the core is about to undergo a disastrous meltdown. Eventually, backup systems are able to slow and reverse the falling water level, and the reactor is brought under control.
In the observation gallery looking over the control room, Richard, when told he was not permitted to film the control room for security reasons, has tucked the camera under his arm and surreptitiously films the incident. Because the glass is soundproof, the visitors can only guess as to what is happening, however, the panic of the crew is quite apparent, as is their relief when the danger has passed.
When they return to the television station, excited about the event and the illegal footage they have of it, the station's news director, after receiving a phone call from his superior, refuses to air the footage, citing federal law and fearing criminal prosecution from Ventana's parent company. Richard, believing that there is more to the story than is indicated in the plant's official statement (which referred to the near-meltdown as an "unexpected transient"), steals the film from the station vault.
Meanwhile, Godell, suspecting there is more to the strange vibration he felt at the beginning of the SCRAM, does some investigating of his own and uncovers evidence that the plant is unsafe. Specifically, he finds evidence that the welds for the water pumps were not properly X-rayed to show their integrity. Godell concludes that another reactor SCRAM at full power could cause the cooling system to be severely damaged which would result in a catastrophic meltdown. Godell asks the plant foreman to delay restarting the reactor but he refuses, under pressure from the plant's owners, who stand to lose millions of dollars each day the plant remains "off line."
An official investigation by the Nuclear Regulatory Commission (NRC) is held and each Ventana employee present at the SCRAM is interviewed for several hours. They are later exonerated by the NRC which concludes that while some errors by personnel were recorded, they still did their jobs adequately. Kimberley Wells travels to a bar near the plant where it's employees often go and meets Godell himself, celebrating the NRC's ruling with his fellow employees. She asks him a few hard line questions about the safety of the plant, however Godell tells her the plant is safe and that there are backup systems to handle problems like the recent event that took place. Kimberly notices that Godell seems a bit nervous about the plant's safety.
Suspicious that there may be more errors to investigate, Jack dons a radiation suit and examines the defective water pump himself with a Geiger counter. He finds an area where nuclear material has leaked onto the floor. His supervisor, Herman, quickly orders a cleanup and tells Jack not to reveal the problem to anyone and to get the plant up and running. Jack does so with obvious reluctance and leaves work for the day but steals some of the damning x-ray films taken by the construction company that built the plant. At a construction site, he talks to one of the firm's officers, showing him the questionable x-ray. When Jack gets no satisfaction, he threatens to go to the NRC himself. The officer tells Jack that the firm has it's own security force that could be sent to harass or harm him.
Kimberley talks to Richard's business partner, Hector, and finds out that Richard, who hasn't been heard from for several days, is at a convention of nuclear scientists in LA. She finds Richard there and he tells her he's showing the film to a couple of nuclear power experts; a physicist and an engineer. The two scientists determine that the plant very nearly went into meltdown, called the "China Syndrome" where the nuclear material heats beyond the capacity of the plant's personnel and safety systems to stop it. Reaching ground water under the plant, the material would explode into the atmosphere, rendering most of southern California radioactive an uninhabitable wasteland for decades and possibly causing illnesses like cancer in the region's inhabitants. Kimberly and Richard both go to Godell's house and confront him directly, saying they know that Godell and his team narrowly avoided a meltdown. Godell, more nervous than he was before, tells them that he agrees with them and tells them about the false X-rays and the cost-cutting measures done by the contracting company. He also tells them that he was threatened by the firm if he goes to the NRC. Kimberly and Richard agree to keep Godell's identity anonymous if he can get them some of the incriminating evidence to present at the conference where Richard had talked to the two nuclear scientists.
Richard arranges for Godell to meet Hector with a bundle of the x-ray film, but while Hector drives to the convention to deliver them, he's run off the road by hit men from the contracting firm. Kimberly calls Godell and asks him to speak directly to the convention committee himself. On the way there, he is chased by more hit men and is unable to join Kimberly. He drives to Ventana, knowing the men following him won't be permitted past the plant's security gates.
Godell rushes to the control room and finds the plant is nearly at full power. Now convinced of the evidence and unable to stop the power-up, he grabs a gun from the control room's security guard and forces everyone out. Once alone and secured inside the control room, he brings the power down to a safer level. He also tells the plant's managers that if anyone attempts to take control of the reactor from the outside or break in, he'll open valves and flood the containment building with radiation, which would render the plant unusable. He then demands to be interviewed by Wells on live television.
Kimberly arrives and is escorted into the control room. Godell tells her that he'll voice his concerns about the plant's safety on live television. Kimberly contacts Richard, who contacts every other major television network. In the hour it takes for them to arrive, the plant's parent company's CEO, McCormack, orders Herman to find a way to cause a reactor SCRAM. The SCRAM, if plotted correctly, will distract Godell long enough for the rest of the team to seize control of the plant. After Richard leads the TV production teams into the same observation room he original filmed in, he misses seeing the SWAT team that also arrives to deal with Godell himself.
Kimberly begins to interview Godell, who speaks frantically and makes little sense while explaining the more technical aspects of the recent accident. In the middle of the live interview, the SCRAM is started and the camera's cables are physically cut. Godell begins to panic, rushing from one control panel to the next, trying to avert a catastrophe. The SWAT team suddenly bursts into the control room and shoots Godell. Kimberly tries desperately to help him, however, Godell, near death, tells her "I can feel it..." An ominous vibration, like the one Godell felt in the first incident, shakes the room. More alarms begin to sound and the SCRAM causes significant damage to the plant, as portions of the cooling system physically collapse. The reactor is eventually brought under control by the plant's automatic systems and by Godell's co-worker, Ted Spindler. When the incident ends, Kimberley sees that Godell has died.
Outside the plant, a phalanx of reporters and television crews are awaiting word on the events inside. When the plant spokesman suggests that Godell was "emotionally disturbed" and that he "had been drinking", Kimberly Wells confronts the spokesman in front of the other reporters, and eventually gets one of Godell's co-workers, Ted Spindler, to admit that Godell would not have taken such drastic steps had there not been something dangerous about the plant. Ted tells the media that Godell was a hero for averting a disaster and that there will be a much deeper investigation this time. As Kimberly, obviously upset at Godell's death, gives her closing comments, the broadcast is cut off.