In 1988, businessman Oh Dae-su was arrested for public drunkenness, causing him to miss his daughter's fourth birthday. After his friend Joo-hwan picks him up from the police station, Dae-su is kidnapped and awakens in a sealed hotel room, where food is delivered through a pet door. Dae-su learns that his wife has been murdered and that he has been framed as the prime suspect by his captors. As years of imprisonment pass, Dae-su grows deranged from solitude. He attempts suicide by slashing his wrists, but is kept alive by his captors. After this, Dae-su spends years practicing martial arts against the solid wall and attempting to dig an escape tunnel so that he might seek vengeance upon his captors.
In 2003, 15 years into his imprisonment, Dae-su is suddenly released after being sedated and hypnotized. Dae-su awakens on a rooftop, where he meets a suicidal man. After testing his fighting skills on a group of thugs, a mysterious beggar gives him money and a mobile phone. Dae-su enters a sushi restaurant where he encounters Mi-do, a young chef. Upon receiving a taunting phone call from his captor and consuming a live octopus, he collapses and is taken in by Mi-do. Dae-su attempts to rape Mi-do and then regretfully attempts to leave her apartment, but they reconcile and begin to form a bond. Once he has recovered, Dae-su tries to find his daughter, but gives up after learning she was adopted following his kidnapping. Now focused on identifying his captors, Dae-su locates the Chinese restaurant where his prison food was prepared, then follows a deliveryman to find the hotel room.
Dae-su learns the hotel is a private prison where people pay to have others incarcerated. He tortures and interrogates the warden, Mr. Park Cheol-woong, who divulges that Dae-su was imprisoned for "talking too much". Park's guards come and attack Dae-su, and a fierce fight ensues in a corridor. Dae-su is stabbed but manages to defeat them all. His captor is then revealed to be wealthy businessman Lee Woo-jin, who gives Dae-su an ultimatum: If he can uncover the motive for his imprisonment within five days, Woo-jin will kill himself; otherwise, he will kill Mi-do. Dae-su and Mi-do have grown closer and eventually have sex.
Joo-hwan contacts Dae-su with important information but is murdered by Woo-jin while they are on the phone. Dae-su recalls that he and Woo-jin attended the same high school, where he witnessed Woo-jin committing incest with his sister, Lee Soo-ah. Dae-su told Joo-hwan what he had seen, leading his classmates to gossip about Soo-ah. Soo-ah later committed suicide following a phantom pregnancy, leading a grief-stricken Woo-jin to seek revenge. In the present, Woo-jin cuts off Mr. Park's hand, so Park and his gang join forces with Dae-su. Dae-su leaves Mi-do with Mr. Park and sets out to face Woo-jin.
At his penthouse apartment, Woo-jin shows Dae-su a family album with photos of Dae-su, his wife, and his infant daughter together fifteen years earlier, progressing to pictures of his daughter as she grew up, which reveal that Mi-do is Dae-su's daughter. Woo-jin reveals that he orchestrated events through hypnosis to guide Dae-su to the restaurant so that he and Mi-do would fall in love, for Dae-su to experience the same pain of incest that he had. Woo-jin reveals Mr. Park is still working for him and threatens to tell Mi-do the truth. Dae-su desperately apologizes for spreading the rumor that led to the death of Woo-jin's sister. Dae-su begs for Mi-do to be kept ignorant and debases himself by begging on all fours, acting like a dog, and licking Woo-jin's shoes. When Woo-jin is unmoved, Dae-su cuts out his tongue as an act of penance. Woo-jin finally accepts Dae-su's apology and instructs Mr. Park not to reveal the truth to Mi-do. He then drops what he claims to be the remote to his pacemaker and walks away. Dae-su activates the device in an attempt to kill Woo-jin, only to find it is the remote for a reel-to-reel tape recorder that plays an audio recording through large loudspeakers of Dae-su and Mi-do having sex. As Dae-su collapses in despair, Woo-jin enters the penthouse lift, and as he recalls his involvement in his sister's suicide, shoots himself in the head.
Sometime later, Dae-su locates the hypnotist and writes to her requesting that she erase the knowledge of Mi-do being his daughter so they can remain happy together. At first, she expresses how she did not feel the need to help him, but was touched by a certain line in his letter, "Even though I'm no better than a beast, don't I have the right to live?", something said by the man on the rooftop where Dae-su was first released. The hypnotist guides Dae-su to envision the part of himself that knows the truth dying. Afterward, Mi-do finds Dae-su lying in the snow, but there is no sign of the hypnotist. Mi-do confesses her love for him, and the two embrace. Dae-su breaks into a broad smile, slowly replaced by a more ambiguous expression.
