The movie opens with shots of several dozen top hats inexplicably strewn about in a forest.
Cutter (Michael Caine), in voiceover, explains to a little girl while performing a disappearing bird trick that there are three parts to every magic trick. Part one is the pledge, where the magician shows you something ordinary, like a bird. Part two is the turn, where he does something extraordinary, like make the bird disappear. But this isn't enough. There always has to be a third act, the prestige, where you have a twist, and bring the bird back. Only then will the audience applaud.
Robert Angier (Hugh Jackman), stage name "the Great Danton," attempts a transporting trick that involves walking under a giant electrical machine with a Tesla coil and then disappearing through a trapdoor. Except that he falls straight into a giant tank of water that has been placed under the stage, and is automatically locked inside. A man in the audience, who we shortly learn is fellow magician Alfred Borden (Christian Bale), stage name "the Professor," forces his way beneath the stage in time to see Angier drown.
After this introduction, we follow three timelines at once. In the present day (19th century England), Borden is on trial for murdering Angier, who we learn was his greatest rival. Cutter is revealed to be Angier's engineer, the man who builds the machinery for his tricks, and the little girl is Borden's daughter Jess (Samantha Mahurin).
Cutter confides to the judge in a private meeting that the machine Angier was using wasn't built by him, but by "a wizard," and it legitimately did what it appeared to do.
The trial does not go well for Borden. He is found guilty and faces execution. Later, in jail, Borden is approached by the solicitor for Lord Caldlow, a collector who is interested in buying his secrets, particularly the secret of Borden's famous "Transported Man" trick. The same collector has also bought all of Angier's equipment and props. When Borden refuses, the solicitor threatens that Jess is in danger of being declared an indigent orphan and sent to the workhouse unless his patron intervenes. As an incentive, he gives Borden Angier's diary, which documents the time he spent in Colorado trying to learn Borden's secret.
Borden's reading of the diary in prison frames the second part of the narrative, which is told from Angier's point of view. Angier is on a train in the Rocky Mountains, headed to Colorado Springs, Colorado, on his way to see the notorious scientist Nikola Tesla (David Bowie). Disembarking at the train station in town, Angier is taken by coach to the inn, where he gets an unusually warm welcome from the hotel staff. The manager tells Angier that he's their first guest of the winter. Angier asks if a ride can be arranged to take him up to Pike's Peak the next day, but is told that the peak is closed for experimentation.
The next day, Angier is dropped off on a dirt track in the woods, at the farthest point the carriage can take him. He makes his way up to the fence surrounding a clearing. He is immediately thrown back as the fence is electrified. Tesla's assistant Alley (Andy Serkis) comes out of the gatehouse, thinking at first that Angier is another intruder, then recognizes him, saying he's seen Angier's London show. Angier says he's come to ask Tesla to build him a machine like one that he believes Tesla built for Borden — the machine that allows Borden to do the "Transported Man" trick. Alley says he can't help Angier, and Angier heads back to the hotel, disappointed. Alley takes satisfaction when Angier, back turned to him, correctly guesses that Alley is holding a gold watch in his hand.
Angier sits down in his room and begins decoding a diary he stole from Borden, which is encrypted with a particular five-letter-word passcode.
Borden's diary frames the third thread of the narrative, which goes back to the very beginning.
Angier and Borden are partners, up-and-comers working as assistants for an elderly magician named Milton (Ricky Jay). Milton also employs Cutter and Angier's wife Julia (Piper Perabo). Their best trick is an underwater escape act. In this act, Angier and Borden are planted in the audience and called up to the stage to tie Julia's wrists and ankles before she is hoisted up on a pulley and dropped into a water tank. A curtain descends on the tank, and Julia slips the knot around her wrists and escapes using a trick lock on the tank. As a safety precaution in case Julia can't get out in time, Cutter is positioned stage right, behind the curtains, with a stopwatch and an axe.
Angier and Borden are on friendly terms, though Angier is somewhat concerned that Borden might be using a knot that is more difficult for Julia to slip. It is also revealed that Angier is using an alias so he won't embarrass his prominent family with his theatrical pursuits, while Borden and his engineer Fallon come from a rougher background. Borden is much more ambitious than Angier, isn't afraid to do dirtier tricks, and wishes Milton would try more dangerous tricks, like a bullet catch. Borden claims to have created a trick that will be his masterpiece.
One day, Cutter sends Angier and Borden to watch a Chinese magician, Chung Ling Soo (Chao Li Chi), and figure out exactly how the man makes a heavy goldfish bowl (filled with water and goldfish) appear from under a cloth. Borden immediately deduces that the old magician is really putting up a front: he's holding the bowl between his legs under his skirt, hiding the strength required to accomplish the trick by always appearing frail in public. Borden admires the way the Chinese magician goes to such an extreme that he "lives" his performance at home. Angier is surprised, since when he tries holding an empty goldfish bowl at home, he has a hard time carrying it.
As his prize for working out the fishbowl trick, Borden gets a few minutes onstage assisting Milton during a performance, where he performs a trick where a bird and cage disappear simultaneously, and then the bird reappears. A boy in the audience becomes upset when he realizes the bird in the cage isn't the same as the one that reappears. Borden tries to help the boy's aunt, a woman named Sarah (Rebecca Hall), to console him. After the show, we discover that the bird in the cage has to die to achieve the illusion, as Borden is seen tossing the original bird's carcass in the trash. Borden and Sarah strike up an acquaintance and become romantically involved.
Disaster strikes during the next performance of the underwater escape. Borden ties, stops, and then reties the knot around Julia's hands as they prepare to put her on the hoist. She can't manage to slip the knot underwater, and Cutter isn't able to break the glass of the tank in time to save her. Julia dies onstage, leaving Angier devastated and Milton ruined. During the funeral, Angier confronts Borden, asking which knot he tied. His answer is that he "doesn't know," which Angier cannot accept. This animosity soon festers, and as time goes by, the two magicians become bitter rivals.
Borden and Angier both strike out on their own, but there are obvious tensions. Borden marries Sarah and starts doing his own act, the climax of which is a bullet-catching trick. The secret, as Borden explains to his pregnant wife, is that the bullet is palmed, so that it's already in the magician's hand when the gun is fired. All that comes out of the pistol is gunpowder. But magicians have died during the trick because of audience members sticking buttons or their own bullets into the guns.
Borden is next seen performing for a very rowdy audience. After whipping out the gun to silence the audience, he asks for volunteers, then hands the gun to a disguised Angier. Angier, knowing the trick, deliberately puts his own bullet into the gun, and confronts Borden again about the knot he tied. When Borden's answer is still "I don't know," Angier shoots him, blowing the ends of two fingers off his left hand and jeopardizing Borden's career. Sarah encourages him to quit magic. She isn't happy that Borden keeps secrets from her as part of his trade. Their marriage is an uneven one, and she claims that when he says that he loves her, she can tell on some days he doesn't mean it. Borden admits this is true and they make a sad little game of it: some days he loves her, some days he loves the magic.
One day at a bar, Angier is approached by Cutter, whom no one will hire because of his association with Milton. They start their own act, with Angier performing as "the Great Danton" (a name suggested by Julia that he'd rejected at the time for being "too French"). His lovely assistant is a blonde bombshell named Olivia Wenscombe (Scarlett Johansson). Because Angier doesn't want to get dirty, Cutter comes up with a new version of the "disappearing-bird-in-the-cage" trick where members of the audience keep their hands on the cage as it disappears. The trick involves mechanical gadgetry that Angier wears under his suit to fold away and retract the cage. Best of all, the bird is unharmed.
Angier debuts the trick at his show. The audience is negative at first, complaining that they've seen the trick numerous times, but Angier says he'll make it a bit harder. He asks for two volunteers to come up from the audience. Two are selected: an elderly woman...and a disguised Borden. Although Angier recognizes Borden the moment he puts his hand on the cage, he is unable to stop Borden from jamming the machinery. The cage malfunctions, causing the bird to be killed onstage and the other volunteer's hand to be caught. The theater owner cancels Angier's booking and Angier's reputation is left in tatters.
Cutter sends Angier to a science lecture to get some new ideas. Nikola Tesla is preparing to demonstrate several huge, fantastic Tesla coils, generating immense electric charges that seem to fill the room. Because of the perceived danger, the demonstration is canceled by the authorities. But Angier spots Borden in the crowd and follows him, learning about Sarah and their new baby, Jessica. Fed by jealousy of Borden's happiness, which Angier feels should have been his, Angier's obsession over the rivalry grows.
Intercut with this storyline are Angier's attempts to meet with Tesla and commission his own transporter machine. Tesla has supplied Colorado Springs with electrical service, in exchange for being allowed full use of the generators at night (when the residents are sleeping) to conduct experiments. He's even rigged up his own electric fence. When Tesla finally agrees to build the machine for Angier, he warns that it will take a great deal of time and money.
In Borden's diary, we learn that both magicians start performing again. Borden, as "the Professor," has a dramatic new trick called the Transported Man that has been getting him attention. Angier and Olivia, who is falling in love with her magician, watch it repeatedly and are unable to figure out how he does it. The trick appears deceptively simple: Borden gets into a cabinet on stage right and gets out of another cabinet on stage left. Cutter insists that he must be using a double, but Olivia insists that she can see the bandaged stumps on his left hand both when Borden disappears and when he reappears, even though Borden wears padded gloves to hide his short fingers.
Angier and Cutter copy the trick and add the bit of showmanship and flair that Borden's version is missing. In his version, Angier throws his hat across the stage and walks through a door on one side of the stage, secretly drops through a trapdoor hidden behind the door frame onto a padded cushion, while a double simultaneously is hoisted out of another trapdoor behind the door on the other side of the stage to catch the hat. They hire an out-of-work actor named Gerald Root (also played by Hugh Jackman) to be Angier's double. He's a drunk, but he can perform.
Their act, dubbed "the New Transported Man," is an amazing success. However it comes with one small drawback: Angier has to be the one who sells the buildup to the audience, which means that he's stuck under the stage during the prestige and misses out on the audience reaction while Root gets all the glory (even though Cutter does his best to ensure Root keeps a low profile to avoid the secret being exposed). Even worse, Angier still doesn't know how Borden does his version of the trick.
Angier decides to send Olivia to work for Borden and spy on him to get the secret. Olivia doesn't like the idea, but does as Angier asks and becomes Borden's assistant. To gain his trust, she tells Borden how Angier's trick is done and offers to help him improve on his own act.
In time, Root ends up becoming a massive liability. He realizes that he can control Angier because he's necessary for Angier's biggest trick, and demands larger sums of money. It eventually turns out that Borden has been influencing him, and Cutter thinks Olivia may have betrayed them. Borden's version of the "Transported Man" has improved, and now includes one of Tesla's electricity-generating machines. Cutter gets Angier to agree to phase out the trick.
Root's performances get more intentionally sloppy, and one night he simply isn't there at all. When Angier goes through the trapdoor, the cushion to break his fall has been removed, and he breaks his leg. He watches Borden pop out of Root's trapdoor and proceed to humiliate him, suspending a tied-up Root from the ceiling with an advertisement for Borden's own act, before running out of the theater to his own show.
Angier confronts Olivia, who insists that Borden's trick is accomplished using a double, because she's seen makeup and wigs lying around. He deduces that such items are planted by Borden as misdirection for her. When he questions her loyalty, she produces Borden's encrypted diary as proof that she didn't betray him. However, the five-letter-word to decrypt the diary is still necessary. Angier and Cutter kidnap Fallon, Borden's engineer, and nail him in a box to hold for ransom.
When Borden comes to the meeting place in a cemetery to get Fallon back, Angier demands to know the secret of Borden's "Transported Man" in exchange. Borden writes down one word, "Tesla," which will decode the diary, and suggests that he's teleporting using a machine Tesla built. Borden is then told that Fallon has been buried alive, and Angier asks him how fast he can dig.
Angier leaves for America to track down Tesla, for the second section of the narrative, while Cutter stays behind. He was shot by Fallon in the shoulder while nailing the box up, and doesn't want to pursue the secret of the trick any further. Tesla refuses to meet with Angier, and the latter learns that Tesla has run out of funding and is being hounded by his rival, Thomas Edison. Angier assures Tesla that money is no object and Tesla tells him in turn that the machine is already being built.
Borden's private life starts falling apart. He's having an affair with Olivia, and his wife is drinking because of their deteriorating marriage. At one point, he instructs Fallon to deal with his family while going to see Olivia. He appears to genuinely care for both women. But Sarah eventually hangs herself in Borden's workroom, after trying to confront her husband about one of his secrets.
In Colorado, Tesla and Alley have been unsuccessfully testing the machine they built for Angier. They've zapped his top hat time after time with an impressive electrical apparatus, but the hat won't move an inch.
Angier comes to the end of Borden's diary and realizes that Olivia actually did betray him. She was in love with Angier, but since he used her as a spy without concern for her feelings, she knew she didn't have a future with him. She gave Angier the diary to prove her loyalty to Borden, who wrote it for Angier. The last entry in the diary tells him that "Tesla" was the keyword to decrypt the writing, which is true, but it's not the secret to the trick at all. Tesla never built a teleportation machine for Borden, and Angier has been sent on a wild goose chase.
He goes back to Tesla's lab several times, where the scientist insists that he is capable of building a teleporter, but he never built one for Borden. He tests the machine again, this time using Alley's precious black cat. Alley warns Tesla not to harm the cat. Alley, using the cat's beautiful collar, chains the cat to the spot for the experiment, as Tesla thinks it may be a matter of needing something living. The cat does not like the procedure and hisses, but is completely unharmed. However, the cat doesn't move at all, so Angier leaves in disgust. Then the cat is freed and runs out the front door.
As Angier walks back through the woods, we revisit the first shot of the movie: a heap of top hats on the forest floor. And this time, there are two identical (proven by the collar) black cats among them. The machine has been working all along, but it doesn't move the object from one place to the other. Instead, it creates a duplicate at the destination. Tesla and Alley are amazed, moving from hat to hat and measuring them with calipers. When Angier leaves, Tesla tells him to take his hat. He asks which hat is his and Tesla, smiling for the first time, says "They are all your hat."
Tesla and Alley continue to refine the machine now that they know how it works. They have to leave suddenly in the middle of the night when their lab is burned down by Edison's goons. However, in the care of the hotel manager, Tesla leaves a large, trapezoidal wooden box for Angier, containing the components of the machine with instructions in a note. Tesla's note cautions Angier that using the machine is inviting Angier's doom and warns him to destroy the machine rather than use it.
Angier takes the box back to England and reunites with Cutter. He's ready to perform again, but this time he's extremely secretive about his methods, to the point of hiring blind stage hands and not allowing Cutter backstage at any time. As he demonstrates to an influential promoter, he is zapped with electricity from the machine's Tesla coil, disappears from plain sight, and then reappears up in the balcony, appearing to traverse the distance instantaneously.
The show is a hit and Borden is mystified. All he can tell is that Angier's trick involves a trapdoor, but he has no idea what's going on under the stage. Every night, he can see the blind stagehands removing a box from the theater.
A few nights later, at another performance, Borden sneaks under the stage, as we saw in the prologue, and watches Angier fall through the trapdoor into the tank and drown. It's clear that Borden didn't have anything to do with it, and he actually tries to save his rival's life by attempting to break through the glass of the tank with a pipe. Cutter runs down under the stage and gets the wrong idea. Borden is arrested. Angier is confirmed dead with Cutter identifying the body.
In his prison cell back in the present day, Borden comes to the end of Angier's diary, which gloats that Borden is being blamed for his death. Borden believes the diary must be a fake, until he's called out of his cell to say goodbye to Jess and meet the collector who wants to buy his secrets.
The collector, Lord Caldlow, is Angier. Borden is dismayed that he would go so far and involve his child in their rivalry. Caldlow/Angier refuses to help clear his name, and won't even take the secret of Borden's "Transported Man" when bribed, telling him "mine is better." Borden swears he'll get out and have his revenge, promising Jess he'll come for her.
Cutter discovers Angier alive when he calls on Lord Caldlow to offer him the machine, hoping to convince him to destroy it. Cutter quickly realizes that Angier is remorseless about framing Borden. He says he's figured out the secret to Angier's version of "the Transported Man" and thinks he's gone too far.
Borden has one last visitor: Fallon. Borden tells him what he's learned, gives him the rubber ball he sometimes uses for tricks, and tells Fallon to go "live for both of us."
Cutter brings the machine to Angier, and as he leaves, we see Fallon arrive to confront Angier. This is intercut with scenes of Borden being hanged. Borden dies just as Fallon shoots Angier. The camera pans up to reveal that "Fallon" has two missing fingers and Borden's face.
Angier finally realizes that the secret of Borden's "Transported Man" was simple: Borden had a twin brother, and they were switching back and forth between the double roles of Borden and Fallon. One of them loved Sarah, and one of them loved Olivia. They both lived half of the same life, never telling anyone in order to maintain the illusion. In fact, they went so far as to have the unmutilated twin willingly let his brother amputate the ring and pinkie fingers on his left hand so that they could make the swaps without anyone telling the difference.
Angier, who only ever cared about the glory of wowing an audience, went to far more terrible extremes. In his "New Transported Man," he knowingly created a double of himself every time he used Tesla's machine, and he rigged the trapdoor to drown the one onstage. He never knew if he would be the prestige or the man in the box. The room where the machine is being kept is filled with water tanks, all of which hold a drowned double of Angier for every time he performed the trick. Several times, he mutters to himself a line we've heard before in a different context: "No one cares about the man in the box."
Angier falls and kicks over the lantern as he dies from his wound, and the resulting fire ensures the machine and all the evidence are destroyed.
We loop back to the trick with the small birds in the opening scene (though this time, no birds are harmed) while Cutter reiterates the three parts of a magic trick. As Cutter has told Jess, "before the audience can clap, you have to make the disappeared man come back." On cue, her father appears to reclaim her. She runs into his arms, and Borden and Cutter exchange nods.
