The film starts with the voice of Dr. Louise Banks (Amy Adams) speaking to someone. We see moments of Louise with her daughter Hannah, from her birth, through her childhood years, up until her death at a young age from a fatal disease.
Louise is a linguist and language professor. She begins her lecture to a small class when the students' phones go off. One student asks Louise to turn on the news. It is reported that in at least 12 sites around the world, there are enormous extraterrestrial vessels touching down.
Louise is visited in her office by Colonel Weber (Forest Whitaker) to utilize her linguistic skills to attempt to communicate with the aliens. At night, Weber shows up in a chopper to escort Louise to the base. She joins them and meets a theoretical physicist named Ian Donnelly (Jeremy Renner).
The team arrives at the Montana landing site, while the other 11 sites around the world have bases set up as well and are continuously updating each other on any progress. Louise, Ian, and several others are brought up to the top of the pod, where the lack of gravity allows them to stand before the barrier that keeps the aliens back. They are surrounded by a mist and they appear as large tentacled creatures (later called "heptapods"). Louise attempts to communicate with them by writing "human" on a board. One of the creatures emits a black cloud that forms a circular symbol. Ian decides to call the two aliens Abbott and Costello.
Tensions rise around the country as uncertainty in the heptapods' intentions has sparked panic, causing people to loot and riot.
As the sessions go on, the team records the symbols produced by the heptapods to determine which symbols are translations of the words that Louise has been teaching them ("love", "time", etc.). Louise removes her hazmat suit so that the aliens can see and trust her. She places her hand on the barrier, and one of the heptapods places its tentacle by her hand. Louise then starts to see visions of Hannah.
China's General Shang (Tzi Ma) doesn't trust the aliens and has his team deviate from the set plan by not having the Chinese site communicate their intelligence to the other sites. The Chinese site attempts to communicate with the heptapods through a game of mahjong.
Louise starts to experience dreams in the alien language, while still seeing memories of Hannah as a child showing Louise a drawing of her parents in a TV show she made up. Hannah asks Louise if it's her fault that her father left, but Louise assures her that's not the case. In the present, Louise questions the aliens as to who this girl is.
The aliens deliver a message that is translated to "Use weapon", which generates even greater tension among the other sites. The Chinese deliver an ultimatum to the aliens - they have 24 hours to leave, or the military will initiate a strike. Several other sites gear up to do the same thing, while the sites all disconnect from each other. Louise tells Weber that they need to make sure the aliens know the difference between a weapon and a tool.
Louise and Ian go up into the vessel by themselves, unaware that some of the soldiers placed a C4 bomb in there. As they try to communicate with the heptapods, Abbott starts to create a message with hundreds of tiny symbols scattered all over the place. As the bomb is ready to detonate, Abbott drops Louise and Ian from the vessel as it explodes.
Louise awakens in the base camp. With a strike set to happen, she and Ian race to decode Abbott's message. Ian deduces that many of the symbols for "time" are scattered, but he can't exactly determine what it all means. Agent Halpern (Michael Stuhlbarg) then tells the others about how severe the situation is since Russia has reportedly executed one of their own in order to keep their secrets.
Louise rushes toward the vessel, which sends down a small pod to allow her to go up to the ship. She comes face-to-face with Costello, who tells her that Abbott is dying from the explosion. Costello emits more black symbol smoke, causing Louise to remember Hannah again. Costello then helps Louise to realize that the heptapods' language is meant to be their tool, or rather, a gift to the humans. By understanding their language, they are able to see into the future. This means that all of Louise's memories of Hannah weren't flashbacks, but flash-FORWARDS. Costello explains that they were sent to give humans their language so that they may help the aliens in 3,000 years time.
18 months into the future, Louise and Shang will meet face-to-face, and he will express gratitude for her work and efforts, which ended up convincing him just what the alien's true intentions were. Louise takes Halpern's phone and contacts Shang to his personal number. She and Ian lock themselves away as she tries to send a message in which she tells Shang his wife's dying words.
The Chinese military decides to stand down as reports start flooding in from all over the world. The vessels all rise from the ground and leave Earth in a cloudy mist. Louise and Ian watch them leave. Ian says that the biggest thing about the whole process wasn't meeting the aliens, but it was meeting Louise. Louise then sees more visions of herself with Hannah, but this time with Ian in the picture. They are to become a couple that will eventually become parents to Hannah. In the present, Louise and Ian embrace, and she tells him she forgot what it was like to be held by him.