The opening crawl reveals that the Galactic Republic is in crisis. A separatist movement, led by former Jedi Master Count Dooku (Christopher Lee), has threatened the peace. Senator Padmé Amidala (Natalie Portman), former Queen of Naboo, returns to the Galactic Senate to vote against the creation of an Army of the Republic. Upon her arrival at Coruscant, she narrowly escapes an assassination attempt, a bomb placed on her ship. As a result, Chancellor Palpatine (Ian McDiarmid) requests that she be put under the protection of Jedi Knight Obi-Wan Kenobi (Ewan McGregor) and his apprentice, Anakin Skywalker (Hayden Christensen).
That night, Zam Wesell, a bounty hunter, makes another attempt on Padmé's life, but Wesell is herself killed (to silence her) just after Obi-Wan and Anakin capture her. The Jedi Council sends Obi-Wan to investigate the murder, while Anakin is to protect Padmé by escorting her to Naboo. Anakin welcomes the opportunity; he often becomes angry at and frustrated with Obi-Wan's criticism, and is glad to have an opportunity to be alone with Padmé. Representative Jar Jar Binks (Ahmed Best) assumes the Senator's duties in her absence.
The investigation leads Obi-Wan to the planet of Kamino, where he discovers that a secret clone army is being developed for the Republic. The Kaminoan Prime Minister tells him that this army was ordered some ten years ago by a Jedi Master named Sifo-Dyas, whom the Jedi Council believes to have been killed around the same time. A bounty hunter named Jango Fett (Temuera Morrison) had been hired to be the template for the clones. Obi-Wan meets Jango on Kamino, and believes that he is the killer he has been tracking. After unsuccessfully trying to capture Jango Fett, Obi-Wan places a tracking device on his ship and follows him to the planet of Geonosis.
Meanwhile, Anakin and Padmé spend time together on Naboo, and Anakin reveals his love for her. Padmé resists, explaining that it would be impossible for the two of them to be together; she is a respected Senator, and the Jedi Code forbids marriage or any other form of attachment. Anakin is soon troubled by dreams in which his mother, Shmi (Pernilla August), is in danger and dying. He asks Padmé to accompany him to Tatooine. Upon arriving, Anakin learns that his mother was sold by his former master to a moister farmer who lives outside of Mos Esley. Anakin and Padame arrive at the Lars farm where he meets his stepbrother Owen and his fiancee Beru as well as his stepfather Kleg Lars whom married Shmi. Anakin learns that his mother had been kidnapped one month earlier by local Tusken Raiders. Anakin tracks her to a Tusken camp, where he finds her in poor condition, and within moments she dies in his arms. In a fit of rage, he slaughters the entire Tusken community. Anakin brings his mother's body back to her home, where her funeral is held.
On Geonosis, Obi-Wan learns that Count Dooku and Trade Federation Vicroy Nute Gunray have built a new droid army and that Gunray has ordered the assassination of Padmé. Just before being captured, Obi-Wan relays this information to Anakin so that he can relay it to the Jedi Council on Coruscant. Once the Jedi learn of Dooku's army, Jedi Master Mace Windu (Samuel L. Jackson) leads a team to Geonosis. Meanwhile, Jar Jar Binks calls for Chancellor Palpatine to be given emergency powers, with which he can call the recently discovered clone army into battle.
Back on Geonosis, the manipulative Count Dooku tries to persuade Obi-Wan to join him, warning him that the Senate is secretly under the control of a mysterious Sith Lord by the name of Darth Sidious. Obi-Wan refuses to believe him, saying that the Jedi would have known if that was the case. Upon learning that Obi-Wan is in trouble, Anakin and Padmé go to Geonosis, but they are captured during their infiltration of a droid factory, despite Anakin's valiant efforts.
They join Obi-Wan in an arena-like complex where three huge creatures are unleashed on them for their execution. During their struggle, Mace Windu arrives with the Jedi, and they battle the droid army. Just as defeat for the Jedi seems imminent, Yoda (Frank Oz) arrives with the Republic's new clone army.
The Battle of Geonosis. A large battle erupts between the Republic's clone forces and the Separatists' droid army. Count Dooku attempts to escape, but Obi-Wan and Anakin track him to a secret hangar, where they engage him in combat. Dooku quickly injures Obi-Wan and cuts off Anakin's right arm. Yoda arrives and engages Dooku in lightsaber combat. Dooku, realizing he may be outmatched, causes a support pylon to nearly fall on Anakin and Obi-Wan; Yoda uses the Force to stop this, allowing Dooku to escape with the plans for a new weapon, the Death Star. In a desolate industrial district on Coruscant, he meets with his master, Darth Sidious, who is pleased that the war has begun "as planned". Dooku is revealed to be the apprentice Sith Lord, Darth Tyranus.
On Coruscant, Obi-Wan informs the Jedi Council of Dooku's warning that Darth Sidious is controlling the Senate. All of them, including Yoda, are surprisingly hesitant to believe this, stating that the Dark Side is capable of creating fear and mistrust. Yoda and Windu also agree that the Dark Side is now clouding everything, and that they should closely monitor the Senate.
Meanwhile, Palpatine oversees the launching of a massive clone trooper force. The great and terrible Clone Wars have begin.
In the final scene set on Naboo, Anakin (with a new mechanical hand) and Padmé hold a secret wedding, to which only the droids C-3PO (Anthony Daniels) and R2-D2 (Kenny Baker) are witnesses.