In a dystopian 1997, World War III is nearing an end, both the United States and the still existant Soviet Union suffered greatly in the conflict and both looking for a peace resolution. Manhattan has been turned into a maximum security prison in 1988 because of a nationwide crime increase of 400% in the United States due to a gas attack by the Soviets at the start of the war in which New York was worst hit. Surrounded by a 50-foot (15 m) containment wall, all inmates are sentenced to life imprisonment, and have formed gangs which control the crumbling, garbage-strewn city.
Travelling to a three-way summit between the United States, the Soviet Union and China, Air Force One, the plane of the President of the United States, is hijacked by a sole member of a revolutionary organization opposed to the government. The militant anarchist crashes the plane into Manhattan but the unnamed President (Donald Pleasence) is safely sealed in an escape pod and survives. The United States Police Force Commissioner Bob Hauk (Lee Van Cleef) arrives at the Liberty Island command center where he and the chief of security Remy (Tom Atkins) witness the crash. Hauk assembles a platoon of soldiers and they travel to the crash site in a fleet of helicopters. But when they arrive, they find the escape pod empty, indicating that the President has been taken hostage. An emissary of the inmates, named Romero, appears and tells Hauk and the soldiers that they have the President and if they do not leave the island in 30 seconds, the President will be killed. Romero offers them one of the President's severed fingers as evidence. With no other choice, Hauk orders his men to return to the helicopters and they fly back to Liberty Island. In his office, Hauk meets with the arrived Secretary of State (Charles Cypress) who puts him in telephone contact with the Vice President where Hauk asks for authorization of a rescue attempt and accepts it.
In his office, Hauk offers a deal to a newly arrived prisoner, a scruffy, one-eyed, famous special-forces-soldier-turned-armed-robber named S.D. "Snake" Plissken (Kurt Russell). If Snake rescues the President, and retrieves a cassette tape that contains important information on nuclear fusion, Hauk will give him a full pardon. However, Plissken must complete his mission before the international summit that the President was due to attend, which begins in 24 hours. After Plissken reluctantly agrees to attempt the rescue, Hauk secretly has him injected with microscopic explosives that will blow open his carotid arteries in his neck in 24 hours (one day). The explosives cannot be defused until within 15 minutes before they go off, as a way of ensuring that Snake does not abandon his mission and escape, nor find another way to remove them. If he returns with the President and the tape in time for the summit, Hauk will save him by having the charges in his neck netrualized with X-rays. Snake promises to kill Hauk when he returns.
Snake covertly lands atop the World Trade Center in a Gulfire glider similar to the one he piloted in a daring covert operations action over Leningrad, USSR, and then locates the hijacked plane wreckage and the escape pod, but the President is gone. Snake tracks the President's life-monitor bracelet signal to the basement of an abandoned theater, only to find it on the wrist of an incoherent old coot (George "Buck" Flower). At the theater, Snake meets a friendly inmate nicknamed "Cabbie" (Ernest Borgnine), who offers to help.
After wandering the dark streets, Snake is accosted by the 'Crazies' a subterian gang that hunts the streets at night. Snake first seeks refuge in an abandoned Chuck Full of Nuts diner where he meets a seductive young woman (Season Hubley), who asks to take her away to freedom. But the Crazies soon attack the diner, and Snake is forced to run, leaving the nameless young woman to her fate at the hands of the Crazies. After a chase down a back alley, Cabbie shows up in his taxi and rescues Snake.
Forced at gunpoint, Cabbie takes Snake to see Brain (Harry Dean Stanton), a savy and well-educated inmate who has made the New York Public Library his personal fortress. Brain, who knows Snake from some heists they did in the past, tells Snake that a powerful gang leader, the self-proclaimed "Duke of New York" (Isaac Hayes), and the leader of the Gypies, the largest and most powerful gang in the city, has the President and plans to lead a mass escape across the mined and heavily guarded 69th Street Bridge (the real Queensboro Bridge is the 59th Street Bridge), using the President as a human shield and hostage. When the Duke unexpectedly arrives to get a diagram of the bridge's land mines, Snake forces Brain and his girlfriend Maggie (Adrienne Barbeau) to lead him back to The Duke's compound. After stealing a car from one of the Duke's henchmen, Snake, Brain, and Maggie drive through Skulls gang country along Broadway, bearly escaping. Snake finds the President whom is being held in an abandoned railroad car in what was the Grand Central Train Station, but his rescue fails and he is captured after Brain apparently betrays Snake.
The next day, Snake is forced to fight with a giant power-house brute (Ox Baker), Brain and Maggie trick Romero and the Duke's men into letting them have access to the President. After killing Romero and the guards, they free the President and flee to Snake's glider hoping to escape with the President. Meanwhile, Snake defeats his huge opponent, impressing the crowd. When the Duke learns the President has escaped with Brain, he is furious, and he rounds up his gang to chase them down. In the confusion, Snake slips away and manages to catch up with Brain, Maggie and the President at the glider, but during their attempted getaway, a gang of inmates, called the Indians, push it off the building. Snake and the others soon find Cabbie, and Snake takes the wheel of his cab, heading for the bridge. When Cabbie reveals that he has the nuclear fusion tape (traded to him from Romero who guarded the President and stole it), the President demands it, but Snake takes it.
With the Duke chasing them in his Cadillac, Snake and the others drive over the mine-strewn bridge. After the cab hits a land mine, the cab is destroyed and Cabbie is killed. As the others flee on foot, Brain is killed by a mine and Maggie refuses to leave him. She attempts to hold off the Duke's car by firing at him with a handgun, and she succeeds in forcing Duke's car (a distinctive vehicle with ornate chandeliers mounted on either side of the car's hood) to crash, but he crashes into her, killing her, and he continues his pursuit on foot. Snake and the President reach the containment wall, and the guards raise the President on a rope. The Duke then attacks Snake, but the President shoots the Duke with a submachine gun, killing him (this is indicated to be done in revenge for the torture The Duke put him through). Snake is then lifted to safety, and the mini-explosives implanted in his neck are deactivated with X-rays with seconds to spare.
At Liberty Island, as the President prepares for a televised speech, he distractedly thanks Snake for saving him. Snake asks him how he feels about the numerous men and women who died saving his life, but the President only offers half-hearted regret that visibly disgusts Snake as he sees the President, a trembling and helpless captive, revert back to his self-assured personality. After Snake is pardoned, he decides he will not kill Hauk at this time and leaves the prison. Hauk thanks him for the rescue, and offers the incredulous anti-hero a job of working for the government in other top secret missions. Snake, alienated with the nation he once served with honor, refuses. Hauk tells Snake to think about the offer and notes: "we make quite a team, huh, Snake?" Snake replies: "the name's Pliskin!"
The President's speech commences and he offers the content of the cassette to the summit. To the President's embarrassment, the tape has been switched for a cassette of the swing song "Bandstand Boogie" (the theme from American Bandstand), Cabbie's favorite song. Snake had apparently switched tapes during the chase across the bridge. In the distance, Snake is seen tearing apart the all-important nuclear fusion tape (the only thing to save mankind from nuclear war) and smiling as he walks off into the night. On that cynical note, 'Escape from New York' comes to a close.