The film begins with a body that seems to be falling from the sky, referencing jumpers from the World Trade Center on September 11. Oskar Schell (Thomas Horn) is introduced as the son of German American Thomas Schell (Tom Hanks). At Thomas' funeral Oskar complains that the coffin does not make sense, since it is empty.
In a flashback Thomas and Oskar play a scavenger hunt that gives Oskar the task of finding ordinary objects throughout New York City. The scavenger hunt begins at a swing set in Central Park, where Thomas recalls swinging when he was a child, and demonstrates the fun of jumping off. Oskar, however, is scared of swings, even without jumping off. The games require communication with other people, providing practice for Oskar. They are not too easy: "if things were easy to find, they wouldn't be worth finding".
On September 11, Oskar is let out of school early while his mother Linda (Sandra Bullock) is at work. When Oskar gets home, he finds five messages on the answering machine from his father, saying that he is in the World Trade Center on the 105th floor of the North Tower. Oskar soon learns of the Twin Towers attack by seeing footage on the TV news, and hides underneath his bed. When Thomas calls for the sixth time Oskar hears the phone ringing, but he is too scared to pick it up. The machine records a sixth message, which stops when the building collapses, and Oskar knows that his father has been killed. He never tells his mother about the calls, and replaces the answering machine by an identical one secretly so that his mother will never find out.
A few weeks after what Oscar calls "the worst day", he confides in his German grandmother and they become close throughout their time of depression following Thomas's death. Oskar's relationship worsens with his mother since she can't explain why the World Trade Center was attacked and why his father died. Oskar tells his mother he wishes it had been her in the building rather than his father, and she responds, "So do I.", after which Oskar says he did not mean it, but his mother answers that he did.
A year later, as Oskar explores his father's closet, he knocks over a blue vase and inside it finds a key in an envelope that is labeled with the word "Black". He ponders whether the key was left to him or his mother, but he vows to find what the key fits. When he looks up the name "Black" in the New York phone book and sees that there are about 216 addresses, or 472 people with the last name Black, Oskar vows to meet each of them to see if they knew his father. One day, Oskar realizes that a man has moved in with his grandmother. Oskar's grandmother tells him that the man is a stranger.
When Oskar visits the first "Black", he meets Abby Black (Viola Davis), who has recently divorced her husband. She tells Oskar that she didn't know his father. When Oskar goes looking for his grandmother one day, he stumbles upon the stranger (Max Von Sydow) who does not talk because of his childhood trauma of his parents' death in the World War II bombing of Dresden, and communicates with written notes and his hands with "yes" and "no" written on them. As they become friends and go together on the hunt to find what the key fits, Oskar learns to face his fears, such as those of public transport and bridges.
As their search continues, Oskar becomes discouraged and wants to stop until he notices that the stranger is like his father and concludes that the stranger is his grandfather. Oskar plays the answering machine messages for the stranger, despite the stranger's discomfort. Before playing the sixth and last message, the stranger cannot bear listening any longer, and stops Oskar. Later on, the stranger moves out and tells Oskar not to search anymore, leaving Oskar to conclude that the man is indeed his grandfather. Eventually, when Oskar looks at a newspaper clipping that his father gave him, circling the words "notstop looking" in an article, he turns over the clipping and finds a phone number that is circled. He dials the number and reaches Abby, whom he met earlier and who now wants to take Oskar to her ex-husband, who may know about the key. When Oskar meets Abby's ex-husband, William, (Jeffrey Wright), it is revealed that William had been looking for the key for a long time. William had sold the vase to Oskar's father, who intended to give it to his wife as an anniversary gift. Thomas never knew that a key was in the vase. William's father left the key inside, and it fits a deposit box at a bank, where William's father left something unknown for him. Disappointed that the key does not belong to him, Oskar goes home angry and sad, not interested in the contents of the box.
After Oskar destroys everything that had to do with the search for the lost key, his mother reveals that she knew Oskar was contacting all the Blacks in New York City. After the first few visits she visited every Black that he would meet and informed them that Oskar was going to visit and why. In response, the people Oskar met knew ahead of time why he was coming and usually treated him in a friendly manner. Oskar then makes a scrapbook of his scavenger hunt and all the people he met along the way and entitles it "Extremely Loud and Incredibly Close." At the end of the scrapbook there is an animation where the body that was falling in the beginning is falling up instead of down, as if time is reversing.