The film opens with a shot of Earth from space and an audio track of various samples of recognizable mass communications from world history. The shot suddenly begins to travel outwards from Earth at impossible speed, passing Mars, the Asteroid Belt of the Solar System, passing Jupiter, travelling through Saturn's rings and leaving our Solar System. Travel continues even faster, seemingly faster than light, passing the Pillars of Creation in the Eagle Nebula and out of the Milky Way galaxy. The trip passes through another galaxy, finally showing us a field of thousands of galaxies. After a few moments we pass through the iris of a young girl, Ellie Arroway, who is reciting a HAM radio greeting "C-Q" ("seek you") in her bedroom.
Ellie has a gift for science and is encouraged by her kindly father to communicate with people in distant cities on her HAM. Ellie makes contact with someone in Pensacola, Florida, her longest communication yet at over a thousand miles from her home near Madison, Wisconsin. That night Ellie asks if she could ever have a transmitter powerful enough to talk to her deceased mother (who died in childbirth). Her father says he doesn't know but suggests that Ellie is tenacious enough that she probably could accomplish such a task one day.
Ellie's father dies one night while they stargaze. Ellie seems to blame herself for not getting her father his heart medication in time. Ellie grows up to become a brilliant astrophysicist, earns her doctorate and begins her research with SETI (Search for Extraterrestrial Intelligence Institute) at Arecibo in Puerto Rico.
At Arecibo, Ellie meets influential spiritual ponderer Palmer Joss (Matthew McConaughey), and has an intense, brief, but detached (on her part) affair with him. One day while looking in a Cracker Jack box, he finds a toy compass and gives it to her, 'so she wont lose her way.' Palmer wants to get closer to Ellie in terms of a relationship, but Ellie is more preoccupied with her search for extra-terrestrial life. Shortly after, Ellie is angered when Drumlin pulls her team's funding. She gets in a heated debate defending her work, to which Drumlin chastises her for spending time on 'nonsense.'
Taking action, Ellie and her team pool together to try and get funding for their project from private sources. Ellie and her team spend 18 months searching, before finding their benefactor in the form of S. R. Hadden (John Hurt), a billionaire investor who had been known for innovation and had fallen out of favor in the scientific community. While giving a presentation to the Hadden Industries board of directors, Ellie becomes confrontational when it seems the board has no interest in funding her project. One of the board members receives an unexpected phone call and tells Ellie that she has her funding. Ellie looks at a nearby observation camera and mouths "Thank you."
Hadden's funding allows Ellie to have access to the 'Very Large Array' (VLA) in New Mexico, a facility with 27 large radio antenna dishes which Ellie uses to continue her search. Even here, Drumlin and the scientific community are not far behind. With 4 years of finding nothing, and even though all funding for the project is privatized by Hadden Industries, and because of Ellie's relentless pursuit and reputation for bizarre experiments, the project is still in danger of being shut down by Drumlin again. Even so, Ellie vows not to quit.
One evening, while listening intently, Ellie hears a powerful signal: a prime number pattern emanating from the star Vega, confirmed by others the world over, undeniable and strong in its pulsing power, which is much like a heart beating. Other astronomers in world-wide countries are utilized to record the signal, since the VLA is only aligned to Vega for a certain amount of time. Shortly thereafter, Drumlin inserts himself into the situation, taking credit for Ellie's work. Ellie is also pressured by the president's National Security Adviser, Michael Kitz (James Woods) who wishes to militarize the project, feeling that due to other countries having heard the message, Ellie has compromised national security. The message, however, is transmitted in pulses equaling prime numbers, to wit Ellie explains that mathematics is a universal language, proving the message was not meant strictly for the United States.
Kitz and his assistant Rachel Constantine (Angela Bassett) inform the President when a video feed of Hitler is found mixed into the prime number pulse pattern. It is from the 1936 Olympics, the first television signal strong enough to leave the atmosphere, but the implications are threatening. Is the alien intelligence seeing a friend in Hitler, or merely bouncing the signal back to Earth? Religious right mouthpiece Richard Rank (Rob Lowe) reports that the fundamentalist camp is wary. At the same time, huge crowds of people descend on the VLA compound in New Mexico, trying to hear the signal. Some come for support, others, such as a religious zealot named Joseph (Jake Busey), have come to condemn Ellie and the others, preaching against science and claiming that god exists in Vega.
A short time later it is found that interlaced within the signal, are a number of pages of digital data, over 60,000 in total. Ellie is then given authority over the deciphering, but after many months, the edges of the pages do not seem capable of lining up. Ellie soon gets her answer in the form of Hadden himself, who meets with Ellie privately. Hadden shows considerable knowledge of Ellie herself, saying that he prefers to know as much as he can about his investments. (One of the video clips he uses is that of Ellie presenting to his corporation's board, indicating that he made the phone call that got Ellie her funding.)
Hadden then explains that Ellie and her team had been deciphering the pages in only two dimensions. The pages it seems, were created in three dimensions by an intelligence that would work in that manner for efficiency. With this revelation, Ellie is able to find the "primer", or the key to decoding the alien's message. Within the pages, there appear to be some form of blueprints. While Ellie speculates they could be a transport, Kitz and his security detail feel it could be a weapon of some kind, falling back on speculation that any alien life forms would be hostile to mankind.
The decryption team is able to determine that the plans are indeed for a type of transport and contain an image of a human-like figure. Construction of the machine is estimated to cost as much as about 300 billion dollars, with a number of countries vying for the ability to join in construction, or to have a representative from their country vie for the chance to travel in the machine.
A special panel is convened to select the appropriate candidate for the trip. Ellie is surprised when Drumlin resigns his post to become a candidate. Ellie is also a candidate, and makes it to the final round for deciding who will go. Palmer (who is on the panel) cripples Ellie's chances of being selected by asking her if she believes in God. Ellie indirectly answers the question by not stating a direct answer. Her falter is then picked up by Drumlin, who then speaks 'passionately,' using God in his closing remarks. His 'grandstanding' attitude towards the panel works, and he is chosen to go. Ellie feels betrayed by Palmer, who states that he couldn't choose someone who doesn't believe in God. Ellie angrily tells him that she told the truth, whereas Drumlin just told them what they wanted to hear. She then returns the compass he gave her.
After a few years of construction the machine is completed at Cape Canaveral, and it's first test-run is televised on all major news networks. While Drumlin is supervising the test from the machine, Ellie is allowed to be part of the test's control team at NASA's Mission Control. All seems to be going well in testing, until Joseph (who Ellie had seen previously preaching against the project at the VLA in New Mexico) is spotted on security cameras in the machine's gantry, with explosives strapped to his chest. Drumlin and a number of men try to subdue him, but Joseph detonates the explosives, destroying the machine and those conducting the test inside the machine, including Drumlin. Ellie then returns to the VLA, saddened that her discovery or any chance of making contact appears to have been destroyed. That evening, she is surprised to find a satellite uplink in her apartment. The uplink connects her to the MIR Space Station, which has now become home to S.R. Hadden, as a way to try and slow the terminal cancer that is 'eating him alive.' Happily, Hadden shows Ellie that his company had secretly constructed a second machine in secret on Hokkaido Island, and that he wants her to take the trip this time.
Ellie is flown to a special ship off Hokkaido, where she is met by the machine's crew, and given a pre-flight rundown, showing her everything from survival gear, to a suicide pill in case she is marooned in space. Shortly before the trip, she is reunited with Palmer, who returns her compass that she gave him during their last meeting. He then reveals that he has come to care about her, and that previously, he hadn't wanted her to go, fearing she might not ever return.
Ellie is then put into the transport pod, and after it is launched into the center of the machine, she appears to travel through several wormholes, seeing bits of alien machinery, and a city on a distant planet of some kind. At one point, Ellie separates herself from the restraint chair in the pod to retrieve Palmer's compass which had come loose from her neck. The chair breaks violently apart from its fastenings, fulfilling Palmer's prediction that the compass would one day save her life. As Ellie stares through a wall of the pod, it's translucency reveals a brilliant, celestial event. Before she realizes it, she is transported to a sandy beach environment (similar to the one she drew of Pensacola as a little girl). Suddenly, she notices a shimmering image moving towards her. As it draws near, she is shocked to see that it is her father.
However, she soon determines that everything (the beach, the image of her Father) is not real, but memories and thoughts taken from her mind by the alien (who has taken on the guise of her Father). He explains that this was a way to allow them to make things more comfortable for her. The alien reveals that the broadcast signal from the 1936 Olympics was how the aliens knew about Earth, and that there are many others out in space. When Ellie asks about the transport system, the alien explains that their race found it, but they have no idea who built it. The alien explains that in examining her memories, that humans feel 'so alone.' But to the aliens the one thing they've found that brings them comfort is each other.The alien explains that Ellie has to go home. However, she tries to ask more questions, but is told by the alien that she has taken the first step, and in time, mankind will make another, and find out more. "That's the way it's been done for billions of years," he explains.
Ellie then seemingly lands on the floor of the pod, back on Earth. Asking to know how long she was gone, she is shocked when everyone tells her that the pod just dropped straight through the machine. Footage from a number of video cameras confirms it, and a video recorder that was in her communications headpiece only recorded static.
After these events, Kitz resigns from his post as National Security Adviser, and holds an inquiry to find out 'what really happened.' During the inquiry, Kitz assumes that the entire event was a hoax: from the alien message to the construction blueprints. His feelings are that it was all a scheme perpetrated by S.R. Hadden, maybe in some crazed idea to unite the world (Hadden is unable to be presented to the panel, as he has since died onboard MIR, finally succumbing to cancer). Even with Kitz demanding answers, Ellie explains that without any evidence or proof, she firmly believes that she did travel to Vega, and that she did experience the meeting with the other being. The hearing ends, and Palmer is there to accompany her. Outside the Capitol building in Washington, a number of people are there, many in support of Ellie's theory. As she is put into a car, Palmer is asked his opinion. Stating that since he is a 'man of faith,' he is bound by a different covenant than Ellie. But even so, he does state that he believes her.
In the aftermath of the inquiry, Kitz is in a discussion with Rachel Constantine. After discussing the investigation committee's findings, Rachel explains to Kitz how it appears that he overlooked the portion of the report regarding Ellie's video recorder. While Kitz said that it had just recorded static, Rachel has discovered in the report that it actually recorded 18 hours of static, the precise amount of time Ellie believed her journey had taken.
Ellie is shortly thereafter given a grant to continue her work. She gives a group of grade school students a tour of the VLA facility. When one of them asks her if there could be life in outer space, she echoes her father's sentiment from when she was young, "If there isn't, then it'd be an awful waste of space."
The ending of the film cuts to some time later on. Ellie is still working at the VLA and even more dishes are being built to allow the team to search further into space.
A dedication of the movie to the late astronomer Carl Sagan, author of the novel the film was based upon, precedes the closing credits.