The movie opens with an intro explaining the back-story in detail. In 2017, humans live in near-total isolation, rarely leaving the safety and comfort of their homes, thanks to remotely-controlled robotic bodies that serve as "surrogates," designed as better-looking versions of their human operators. Because people are safe all the time, and damage done to a surrogate is not felt by its owner, it is a peaceful world free from fear, pain, and crime.
We next come upon a young teenage man taking to someone over the phone. After a weird nightclub scene, we then see the teenager making out with a girl he had met in there. They're about to get it on when they're interrupted by a mysterious man wearing a motorcycle helmet, who proceeds to shoot the two surrogate-controlled civilians, then cause a massive car accident while making his escape on his motorcycle.
Agent Tom Greer (Bruce Willis) is an FBI agent who, through the use of his own surrogate, investigates the first murder in years. Turns out the teenager was none other than Jarod Canter, the college student son of Doctor Lionel Canter (James Cromwell), the man who invented the surrogates, and who uses multiple surrogates himself. Geer and his partner Peters (Radha Mitchell) visit the home of the female surrogate's owner, only to find that she was actually a man, and that he is dead in his own operator chair.
After the bizarre and horrifying turn of events, it's revealed that Greer had a son who had died in a car accident, causing a strain in he and his wife Maggie (Rosamund Pike)'s relationship. Since then, Maggie despondently restricts most of her daily activities using her surrogate.
The case grows more complicated, however, when several humans are murdered when their surrogates are destroyed, something which is not supposed to happen, as the human operator is normally safe from the damage done to his/her surrogate. Greer begins investigating the murder and is lead to the Dreads, a group of humans led by a mysterious man known only as The Prophet (Ving Rhames) who are against the use of surrogates. With the help of the system administrator, who does not use a surrogate, Greer and Peters determine the identity of the murderer is a Dread named Miles. Miles used a unique weapon to kill Jarod as well as five cops tracking him with the weapon. Greer barely escapes death by the weapon. He survives by disconnecting himself from his surrogate as the weapon is fired, and then resumes his connection to the surrogate afterwards. Although his surrogate is physically damaged, it is able to pursue Miles before his surrogate is destroyed by the Dreads. Greer is badly hurt by the weapon despite disconnecting. Maggie finds him in his apartment. Greer is then taken to the hospital and survives, although his boss suspends him, Stone, and is not allowed to use a surrogate while his actions are investigated.
At the Dread Reservation, Miles is approached by The Prophet who demands information about the weapon. Miles is apparently killed by The Prophet or his lackeys. When Greer goes into the Reservation, he stumbles upon Miles' funeral and then approaches The Prophet, asking about the weapon Miles used. As Greer leaves the Reservation, it is revealed that The Prophet has the weapon. Greer meets with Dr. Canter, again using one of his surrogates, who suggests the weapon was manufactured by the military. Greer meets with a member of the military and learns that the weapon sends a computer virus into the surrogates that shuts them down, but it also disables the failsafe mechanisms and kills the operator.
A mysterious surrogate goes to the home of Greer's partner Peters and kills her, then transfers control of her surrogate to an unknown party who uses it to go through the financial records of the FBI. The Peters surrogate learns that Stone is apparently behind the death of Jarod, having been assigned by the company that creates the surrogates to kill Dr. Canter, which he in turn assigned to Miles. Jarod was using one of his father's surrogates and as such was mistaken for him. At the Dread compound, The Prophet orders delivery of the weapon to Peters just before the military attacks. The Prophet and his men are killed, but The Prophet is revealed to be a surrogate of Doctor Canter. The Peters surrogate tricks Greer into getting information about the weapon from Stone's computer. The Peters surrogate then flees from Greer, taking the information and the weapon. Greer chases her, but she escapes and goes to FBI headquarters where she hooks the weapon up the surrogate network to kill all the surrogate operators.
Greer calls the system administrator who reveals that Peters has taken him hostage. Greer heads to Canter's home and forces his way into Dr. Canter's home to find him. At the FBI building, the Peters surrogate forces Stone to come talk to her. Dr. Canter reveals that he is now controlling the Peters surrogate. Stone confirms he did try to have Canter assassinated, and Canter kills Stone with the weapon and returns to uploading the weapon's virus to all the surrogates. Greer makes his way through Canter's mansion and finds Canter's many surrogates, which includes the one that killed the real Peters. Greer then finds Canter (who disconnects from the Peters surrogate) who then reveals he wants to destroy the surrogates so that real humans can return to their prior lifestyle. Canter has already started the process through the Peters surrogate, and then he kills himself. Greer takes control of the Peters surrogate. With the assistance of the system administrator, Greer insulates the surrogate operators so they will survive even if the surrogates go down. He is then given the choice of whether or not to save the surrogates. FBI troops storm the room as Greer decides not to cancel the transmission before the Peters surrogate is killed. The virus from the weapon uploads and destroys every surrogate worldwide, leaving his or her operators alive, but having to go back to using their real bodies again.
Greer goes home and connects with his pale and unattractive wife in her real body. In the final shots, media broadcasts reveal the surrogates are down worldwide and no one knows if they will ever be able to be recreated again.