In a downtown office building, an express elevator's cables are blown, and 13 people are trapped inside. Los Angeles Police dispatch their men, including Officer Jack Traven (Keanu Reeves) and Detective Harry Temple (Jeff Daniels). Capt. McMahon (Joe Morton) briefs the men on the situation: bombs have already knocked out the main cables. The only thing keeping the elevator from dropping to the basement is the emergency brake. The bomber has wired this with explosives, and has given a one hour ultimatum: pay him $3.7 million, or he blows the emergency brake.
Both Jack and Harry use building access panels to examine the bomb, before Jack comes up with the idea to use a window cleaner's crane on the roof as a way to hopefully help get the passengers off. However, once they have hooked the crane, the bomber blows the emergency brakes, and the elevator begins to plummet.
The crane cable stops the elevator for a short time between two floors, where Harry and Jack manage to get the passengers unloaded before the crane pulls free of it's base and the elevator plummets to the bottom. Harry notes that the explosion happened earlier than the time limit given, with Jack thinking the bomber must still be in the building. With the main elevators having been shut off, Jack assumes the bomber must be aboard a freight elevator in the building.
Harry and Jack find the freight elevator, where they encounter Howard Payne (Dennis Hopper), their bomber, although his name is not yet known at this point. Payne takes Harry hostage, and shows that he has wired himself with explosives. Payne attempts to take Harry with him to the building's parking garage, but Jack shoots Harry in the leg, preventing Payne from taking Harry any further and causing Payne to drop him. Payne makes a dash out the door, but before Jack can get to him, the explosives go off, knocking him back.
Some time afterward, a commendation ceremony is held in which Jack and Harry are congratulated for their services. They go to a bar where they and their colleagues celebrate their victory. An inebriated Harry tells Jack to be more cautious in his work because his recklessness could get him killed.
The next day, Jack stops into a small coffee shop for a drink. As he goes out to his car, a bus that had pulled away explodes and bursts into flames. A payphone nearby rings, and Jack is surprised to hear Payne's voice on the line. Payne explains that he had spent 2 years planning the 'elevator job,' and chastises Jack for ruining his 'life's work.' The bomber then goes on to explain that he has planted another bomb on a bus, which will be armed the moment the bus passes 50 mph, and then will detonate if the bus drops below that speed. Payne also explains that if any passengers are removed from the bus, he will detonate it himself, and asks for a ransom of $3.7 million (the same amount he'd demanded during the elevator kidnapping) by 11am. Payne gives the bus number as 2525, and Jack takes off to catch up to it.
Jack manages to catch up to the bus en route, but when he frantically tries to get the bus driver to open the doors, the driver ignores him, thinking it's a prank. Jack then commandeers a Jaguar, and again catches up to the bus. After a mad struggle, Jack manages to relay to the driver that there is a bomb on the bus, and manages to board, jumping from the moving car into the bus' door. Harry is also alerted by Jack through the Jaguar owner's cellular phone.
Jack attempts to calm the bus passengers, but an altercation with one man wielding a gun causes an incident to break out, and the bus driver is wounded. A young woman named Annie Porter (Sandra Bullock) takes the wheel, planning to hit the brakes, and it is then that Jack explains about the bomb on the bus to the passengers. Jack opens an access panel in the bus floor, and finds the bomb. Relaying this to Harry, Harry is perplexed that the timer for the bomb is attached to a cheap gold watch. Harry's suspicions turn to the prospect that their mad bomber may be a former officer, and he has his staff start looking over information about officers who have worked with bombs or on bomb squads.
Back on the bus, a traffic jam on the freeways forces Annie to divert the bus onto city streets instead. Eventually, a police escort and a LAPD helicopter with Capt. McMahon aboard guide the bus to the unfinished 105 freeway. Once on the freeway, McMahon and a number of officers board a flatbed truck that pulls up next to the bus. McMahon wants to get the people off, but Jack explains that the news helicopters in the air are televising the event, and that Payne will detonate the bus if anyone gets off.
Jack soon receives a call from Payne in regards to what is being seen on television. Jack manages to get Payne to consider letting the wounded bus driver off, though Payne tells Jack that 'the wildcat behind the wheel' is not to slow down. However, a passenger named Helen (Beth Grant) gets edgy, and attempts to get off the bus. As she stands over the entrance-way stairs, a smaller charge is set off that destroys the platform. Helen falls under the bus and is run over by the wheels.
McMahon is then informed that the 105 freeway is unfinished, and a stretch of roadway ahead contains a 50ft span that is missing. Jack is informed of this, but still refuses to take any passengers off. Jack then instructs Annie to increase the bus speed, figuring their may be an incline that will allow them to jump the bus over the gap. Miraculously, his plan works, and the bus makes it to the other side.
Once over, Jack finds an off-ramp that leads to Los Angeles International Airport. Annie takes it, and enters through an airport exit, running over a pair of spike strips that destroy the tires. Jack's plan is to keep the news copter cameras from following them. Because the airport is restricted airspace, they can't fly over it. The long runways that are not in use will also allow the bus to circle and keep it out of civilian traffic.
Capt McMahon soon shows up at the airport with some more cops, and Jack gets off the bus onto a vehicle with the Captain. McMahon feels they should be able to unload the passengers safely, but Jack is still convinced that Payne will know.
Jack is then put onto a small-wheeled dolly attached by a cable to a small truck and sent under the still-moving bus, hoping to dismantle the bomb. However, the mechanism is too complex, and Jack is unable to stop it. Harry has been giving Jack the information to try and dismantle the bomb, when his associates come back with Payne's identity. Payne turns out to be a former member of the Atlanta Police Department's bomb squad. Harry and his associates rush off to apprehend Howard.
Jack soon comes close to death when the cable towing the dolly he's on gives way, and he is almost run over by the bus. Jack clings to the undercarriage of the bus, but accidentally ruptures the fuel tank with a screwdriver. The passengers on the bus help Jack up through an access panel in the bus' floor, and he survives. With leaking fuel a new problem, Jack calls for a fuel car to pace the bus and refuel them.
Meanwhile, Harry and some other members of the LAPD have staked out and entered Payne's home. They soon find he is not there, but realize this too late, triggering a bomb planted in the house that kills those inside, including Harry.
After the bomb goes off, Payne calls Jack, and gloats over Harry's death. Payne then gives Jack instructions to deliver the $3.7 million ransom to a garbage can at Pershing Square downtown. Jack is unsure what to do next, when he notices the sweatshirt Annie had been wearing, which contains the logo for the Arizona Wildcats. Payne had called Annie a "wildcat" before on the phone, and now Jack realizes that Payne has been monitoring the bus through the security camera above the bus driver's seat. Though the camera can record video, it cannot record audio.
Jack radios over to McMahon regarding his plan. McMahon gets all the news vans nearby to stop taping, and commandeers one to find the signal going into the bus camera. With everyone sitting still on the bus, the news team records them, gathering enough footage to run a video loop to fool Payne. However, Annie notes that the fuel is almost on empty, and McMahon is forced to have the tape loop with only a minute of footage having been recorded.
An airport bus is brought alongside bus 2525, and the passengers are unloaded. However, the tires that had been punctured once the bus went through the airport's exits continue to lose their treads, and Annie and Jack are unable to get off. Jack affixes the steering wheel with some rope, and the two escape from under the bus using the access panel. The bus drives a ways off, before heading towards a cargo plane. As the speed drops below 50, the bus explodes, also destroying the cargo plane.
After the passengers are treated by paramedics, the police receive a call from Payne wanting to know about the money. McMahon is about to tell off Payne, but Jack realizes that Payne does not know the bus exploded, giving them the advantage to capture the madman.
A plan is made with the money placed in sacks, with paint bombs inside. A number of officers patrol Pershing Square, with Payne watching from an overhead building's window. Payne thinks he's won, until he notices the bus camera, and realizes that the tape is on a loop. Payne quickly puts on his uniform, and blending in with the other officers, walks over to Annie, and escorts her away from the scene.
Jack and a number of officers are watching the garbage can, but no one has appeared. Jack suddenly demands they turn on the homing beacon with the money...and all of them are surprised to see that the money is in motion! Jack rushes out to the garbage can, and finds that there is a hole in the bottom of it, leading down to a level below the street.
Jack finds an entrance to the area below street level, and is confronted with Annie strapped with explosives, and Payne standing nearby, holding a detonator. Payne chastises Jack a bit before making his way to the LA subway system, with Jack jumping aboard as it pulls away, crawling across the top.
Payne handcuffs Annie to a pole, and kills the train driver. Payne the explains his plan to Annie: he intends to get off the train with the money, but leave her to explode, causing the police to think they both died on the subway.
Payne's overzealous nature gets the better of him, as he hears Jack climbing on top of the train car. Playfully claiming he may be able to bribe Jack into letting him go, Payne reaches into the sack of money, only to set off the paint bomb, ruining the money.
Payne then climbs up the side of the train car on the outside, and goes hand-to-hand with Jack. As they fight, Jack notices a low-overhanging light approaching, and holds Payne's head up while seizing the detonator to Annie's bomb from Payne. The light decapitates Payne, and his body falls over the side of the car.
Jack then enters the car, and manages to get the explosives off Annie. However, he does not have the key to her handcuffs, and Payne's killing of the train driver has rendered the brakes inoperable. A railmap shows Jack that there's a sharp curve ahead. He speeds up the train with the intention of derailing it. The plan works and Annie is freed from the bar. The train barrels out of an incomplete stretch of track right in front of the Chinese Theater in Hollywood. It lands on its side and comes to a halt. Annie and Jack are both alive and as they kiss, a number of tourists and others whom the train has stopped traffic for, come over to look at the strange spectacle.