In 1988, Dade "Zero Cool" Murphy (age 11) is arrested and charged with crashing 1,507 systems in one day and causing a single-day 7-point drop in the New York Stock Exchange. Upon conviction, he is banned from owning or operating computers or touch-tone telephones until his 18th birthday.
Shortly before Dade (Jonny Lee Miller) turns 18, his mother (now divorced) takes a job in New York City. Upon turning 18, Dade calls a local television station, dupes the security guard into giving him the modem's phone number (a tactic known as social engineering) and successfully hacks into the station's computer network, changing the current TV program to an episode of The Outer Limits. However, Dade is "attacked" by a hacker (handle "Acid Burn") on the same network. During the conversation, Dade identifies himself by the new alias, Crash Override.
Dade enrolls at Stanton High School, where he meets Kate Libby (Angelina Jolie), who is assigned to take him on a tour of the school. After Dade learns that Kate is "Acid Burn", a feud erupts between them.
The real trouble begins when Joey Pardella (Jesse Bradford), the novice hacker of the group, successfully breaks into an Ellingson Mineral Company supercomputer to prove to the rest of the group that he is an elite hacker. To validate this feat, he downloads part of a garbage file. Unfortunately, the company's IT employee Hal (Penn Jillette) detects this unauthorized entry and summons computer security officer Eugene "The Plague" Belford (Fisher Stevens) to deal with the problem. He realizes the file being downloaded can prove that The Plague is stealing from the company via salami slicing. The Plague enlists the U.S. Secret Service to recover the file by claiming that it is the code to Da Vinci, a computer virus that will capsize the company's oil tanker fleet and he needs that code to destroy the virus.
Joey is arrested and his computer is searched, but the Secret Service finds nothing, as Joey has hidden the disk containing the files. In response, Dade and Kate decide to settle their disagreements with a hacking duel, with hacks focused on harassing Secret Service Agent Richard Gill (Wendell Pierce), a known enemy of hackers, who was involved in Joey's arrest. Kate and Dade's hacker friendsRamon Sanchez a.k.a. "The Phantom Phreak," Emmanuel Goldstein a.k.a. "Cereal Killer", and Paul Cook a.k.a. "Lord Nikon" (so named for his photographic memory) act as judges.
After being released on parole, Joey reveals the disk to Phantom Phreak in a public park; but they quickly realize that they are being followed by the Secret Service. The next day, Phreak is arrested. He uses his phone call to inform Kate that he hid the disk in a boy's bathroom at school. That evening, Kate and Cereal Killer ask Dade for his help; but, because of his record, he declines. Kate then asks Dade to copy the disk so that, if anyone else is arrested, they have the disk as evidence.
After determining that Dade is not the one who hacked into Ellingson, The Plague attempts to enlist Dade's help to find the one who did. First, he offers Dade a free high-powered laptop. Later, he threatens to have Dade's mother incarcerated with a manufactured criminal record. At this, Dade agrees to deliver Kate's copy of the disk.
Meanwhile, Kate, Lord Nikon, and Cereal Killer attempt to discern the contents of the disk. Dade joins them; and, after working all night, they learn the truth. It's designed to salami-slice $25 million from Ellingson transactions. Dade reveals that he knows Plague is behind this scheme, because he was the one who wanted Kate's copy of the disk. He admits he gave Plague the disk and reveals his history as Zero Cool.
Determined to stop the scheme, the assembled hackers plan to hack the Gibson again. Kate and Dade go dumpster-diving for employee memos with passwords; Cereal Killer installs a hidden microphone in the Ellingson offices; and Nikon poses as a delivery boy wandering the Ellingson cubicles, memorizing employee passwords as they enter them. From the memos, they discover the Da Vinci virus is set to capsize the fleet the next day, which would provide the perfect cover to distract from the salami-slicing worm. In need of help, they seek out Razor and Blade, the producers of a hacker-themed pirate TV show, "Hack the Planet."
The next morning, they evade the Secret Service and converge on Grand Central station, where they use payphones to begin their assault on the Gibson. At first, their attempts are easily rebuffed by Plague, who calls Dade to warn him to escape before he is arrested. However, Razor and Blade have contacted hackers around the world, who lend their support with virus attacks, distracting Plague long enough for Dade to download the incriminating file to a floppy disk.
Shortly after crashing the Gibson, Dade and company are arrested. As they're being led away, Dade surreptitiously informs Cereal Killer, hiding in the crowd, that he's tossed the disk in a trashcan. As Dade and Kate are being interrogated, Razor and Blade jam the local television signals and broadcast live video of Cereal Killer, revealing the plot and Plague's complicity. Plague is arrested when he tries to flee to Japan under the alias "Mr. Babbage" (a reference to Charles Babbage).
Their names cleared, Dade and Kate go on a date. Kate even wears a dress. While relaxing in a pool on the roof of a building, their friends show off their latest hack. The lights in several adjacent office buildings spell out "CRASH AND BURN."