On the border region of Russia, a large bazaar of illegally obtained weapons are being sold to international terrorists. Far away, in an observation room, M, her assistant, Charles Robinson and a British admiral, Roebuck, are watching the operation through cameras placed by an agent they've sent into the area. They identify many of the weapons and several of the buyers.
Over M's protests, the officers agree to launch a guided missile into the area believing that they will eliminate half of the world's most dangerous criminals. The missile is launched from a British frigate and speeds toward the target just as the command center receives a radio call from their agent on the scene. Among the camera images is a plane holding two powerful soviet nuclear weapons which may be triggered by the guided missile. An attempt to abort the missile attack fails and the agent, who is revealed to be James Bond, rushes into the area to steal the plane and the bombs. The attack causes most of the terrorists to flee the area.
Bond reaches the plane and knocks the pilot in it unconscious. He successfully escapes the valley before the missile hits but is pursued by another of the surviving terrorists in a plane identical to his. He evades the 2nd plane, however, the pilot he knocked out awakes and throws a heavy cord around Bond's neck. Bond keeps control of the plane, flying under the second one and activates the rear ejection seat of his own plane, throwing the man up into the other plane, causing it to explode. Bond contacts the command center and tells them he is flying home with the nukes, asking the admiral where he wants his bombs delivered.
In the South China sea, a British missile frigate, the HMS Devonshire, is on patrol and is being threatened by Chinese MIGs. They are supposedly far off their course and in Chinese territorial waters, despite what their satellite position tells them. Nearby, an odd-looking boat, equipped with stealth technology, launches a sea drill into the water and punctures the hull of the British ship. It continues into the ship causing much damage and the ship sinks. The boat's commanding officer, Richard Stamper, contacts his boss, Elliot Carver, a British media mogul, to tell him the 1st part of the operation is complete. Carver approves and gives Stamper the go-ahead for the 2nd part: many of the sailors aboard escape and are swimming towards the stealth ship. Stamper proceeds to machine gun the survivors with special ammunition that would've been used by the Chinese. Back at his own command center, Carver is writing the headline for his international newspaper, Tomorrow, trying to decide if the words "British Soldiers Murdered" will generate the proper outrage.
In London, Bond is called back to duty during a romantic tryst. He is ordered to investigate Carver's involvement in the Devonshire incident. Besides the critical details of the incident being released hours before they became known in the Tomorrow newspaper, MI6 has traced the mysterious signal that interfered with the communications with the Devonshire to one of Carver's satellites. Bond's lead-in to get to Carver will be a past relationship with Carver's wife Paris. Bond travels to Hamburg, Germany where Carver is scheduled to hold a big unveiling of his new media center. At the airport, he meets Q who provides him with a cellular phone and his car, a BMW 750 that can be remotely driven by the phone.
Bond attends Carver's gala party and reconnects with Paris Carver and meets a new woman, Wai Lin, who claims to be from the new China news agency. During the gala party, Bond is apprehended by a few of Carver's thugs who take him to a sound proof room to beat him senseless. He overpowers them and shuts down Carver's broadcast. He returns to his hotel room to find Paris Carver waiting for him. The two sleep together and she tells him a way to infiltrate Carver's Hamburg media headquarters.
The next day, Bond breaks into the headquarters of Carver's media company and finds the office occupied by Henry Gupta, Carver's communications specialist and known techno-terrorist. In Gupta's safe, Bond finds a CIA decoder device, the same one Gupta took from the arms bazaar Bond infiltrated earlier. It is believed that the device may have been used by Gupta to guide the Devonshire off course. Bond takes the decoder and is leaving the building when he is discovered by the guards. While escaping the factory, Bond spots Lin leaving as well.
Bond is able to leave the factory in his car, which he drives to the parking garage of his hotel. On the way, he gets a call from Carver, who has been tipped off about his wife's involvement with Bond thanks to Gupta enhancing surveillance footage, and the theft of the decoder, and has had an assassin named Dr. Kaufman kill her in Bond's hotel room. Bond activates the security system and goes to his room. There he finds Paris, dead on the bed. A videotape playing nearby shows a completed Carver broadcast saying Paris will be discovered murdered with an unidentified man, who will be found dead from a self-inflicted gunshot wound. Dr. Kaufman promptly appears and takes Bond hostage at gunpoint. He is going to shoot Bond and make it look like a murder-suicide. He is about to shoot Bond when he suddenly is informed over his earpiece by Stamper that the BMW's security system makes it impossible for Carver's men to get the decoder. Dr. Kaufman is told to torture Bond to find out how to get into the car. Bond hands over his cell phone and gives a code to punch in which will unlock the car. The phone sends a powerful electric shock into Dr. Kaufman and Bond turns the doctor's gun on the man and shoots him, completing the Carver media image of Paris' death.
Bond returns to the parking garage and activates his car with his phone. He jumps into a rear window and pilots the car from the back seat. Carver's men have set up several traps for him but the car's defenses and weapons allow Bond to escape them. He pilots the car to the top level of the garage, jumps out and allows it to drive off the edge and plummet to the street where it lands directly in the Avis Car Rentals office he got the car from.
Bond reports to the South China Sea where he meets with American and British military officials and his CIA contact, Jack Wade. Bond shows the group how the decoder works and was used to change the location of the Devonshire. Now that they know were to find the sunken ship, Bond will explore it to prove that the ship was deliberately set off-course. Armed with a parachute and scuba gear, Bond must "HALO" jump into the wreck site, opening his chute a short distance above the water to avoid radar detection.
The military officials discover that the site of the Devonshire is not actually in Chinese waters but those of Vietnam, making Bond's HALO jump more dangerous. Bond reaches the wreck and finds Wai Lin there already. The two discover that two of the Devonshire's guided missiles have been stolen. They surface before the ship sinks deeper into the sea and are promptly captured by Stamper on a Vietnamese fishing boat. They are taken to Carver HQ in Saigon, where they reveal they've been working together on the case for months. Carver orders Stamper to torture them both.
Bond and Lin, though handcuffed together, start a gunfight and escape the building. They steal a motorcycle and are chased through the streets until cornered by Carver's helicopter. They grab a cable and are able to throw it into the tail rotor of the chopper, which crashes. Shortly after, while cleaning up, Lin unfastens her handcuff and refastens it to a pipe and leaves Bond behind. He quickly frees himself and tails her to her hideout. She's attacked by several thugs but Bond intervenes and they beat them. They decide to search for Carver's stealth boat together and re-arm themselves.
The two search several areas large enough for Carver to hide his stealth craft and get lucky on the last cove. The board the boat and plan to plant explosive charges to disrupt it's radar cover and make it visible to the British fleet. Lin is captured and Bond sneaks inside. Carver reveals his ultimate plan; he will launch one of the stolen British missiles into China, provoking a war. The new conflict will be covered by his media group and he will bid for exclusive rights to media coverage in China when his secret partner General Chang takes control of the Chinese government and miraculously ends the conflict. Bond is able to take Gupta hostage; Carver kills Gupta openly after the tech-expert tells his boss that the preparations are complete. However, a grenade planted by Bond with a small triggering device goes off, causing a huge explosion.
The boat, now visible to radar, is attacked by the British navy. Carver orders Stamper to go ahead with the missile launch. With the boat disintegrating around them, Bond fights through several of Carver's henchmen and corners the villain. Bond activates the sea drill hanging nearby and forces Carver into its path, killing him.
Stamper has chained Lin and dangles her over the indoor pool; when she passes Bond some detonation fuses to sabotage the missile, Stamper drops her in the water. Bond and Stamper fight briefly and Bond traps the thug's ankle under the missile. With Stamper holding him in front of the missile's engines, he hopes that Bond will burn and die with him. Bond is able to cut the straps on his pack and he plunges into the water just as the missile launches and the detonators destroy it and Stamper. Under water, he rescues Lin, breathing air into her lungs with a kiss. The two surface just as the stealth boat sinks. They are later picked up by the British Navy while sharing a romantic moment in a lifeboat.