Travis Bickle (Robert De Niro) goes to a New York City taxi depot where he applies for a job as a driver to the tough-talking personnel officer (Joe Spinell). Travis claims that he is an honorably discharged Marine (it is implied that he is a Vietnam Veteran). After making an impression on the personnel officer, Travis gets the job for the night shift due to his chronic insomnia.
Via his narrative journal, Travis is soon revealed to be a lonely and depressed young man of 26 years. His origins and hometown are unknown. He sends his parents letters as well as birthday and Christmas cards, lying about his life and saying he works with the Secret Service. Travis spends his restless days alone in his rundown apartment somewhere in Manhattan, or in seedy porn theaters on and off 42nd Street. At one porn theater he tries to make an advance on the concession lady to no avail. He works 12 or 14 hour shifts during the evening and night time hours carrying passengers among all five boroughs of New York City. Sometimes during his breaks, he goes to a local all-night diner to have something to eat or just a few cups of coffee where fellow taxi drivers also hang out during their late-night lunch breaks. One of whom is a self-appointed philosophical type named Wizard (Peter Boyle). Wizard talks about the degradation of the night time in the city. Travis barely interacts with the other taxi drivers, mainly speaking awkwardly and shyly when he's spoken to.
During taxi driving, Travis spies and becomes infatuated with a woman named Betsy (Cybill Shepherd), a campaign volunteer for New York Senator Charles Palantine, who is running for the presidential nomination and is promising dramatic social change. Travis spies Betsy joking with a co-worker named Tom (Albert Brooks). Travis works up the nerve to ask her out and Betsy is initially intrigued by Travis. She agrees to a date with him after he flirts with her over coffee and sympathizes with her own apparent loneliness. She compares him to a character in the Kris Kristofferson song "The Pilgrim, Chapter 33."
Travis is further revolted by what he considers the moral decay around him. One night while on shift, Iris (Jodie Foster), a 12-year-old child prostitute, gets in his cab, attempting to escape her pimp. Shocked by the occurrence Travis fails to drive off quickly enough and her pimp, "Sport" (Harvey Keitel), reaches the cab. Sport forcibly grabs Iris away with him and gives Travis a crumpled twenty dollar bill as a bribe not to say anything, which haunts Travis with the memory of his failure to help the girl.
During one of his shifts, Travis picks up Senator Palantine himself (Leonard Harris) and an aide. He tells the senator he plans to vote for him and the senator, acting like a real politician, tells Travis he learns more from cab drivers than limo drivers. The senator asks Travis "What's the one thing that bugs you the most?" and Travis responds that he would like the next president to "clean the scum off New York City."
On their date, however due to his lack of social skills, Travis takes Betsy to a porno theater to view a hardcore Swedish "sex education" film (titled: Language of Love). Offended, she leaves him and takes a taxi home alone. The next day he tries to reconcile with Betsy, phoning her and sending her flowers, but all of his attempts are in vain and she refuses to speak with him. Going back into the campaign office, Travis confronts Betsy and shouts that she will "burn in hell like the rest of them."
Rejected and depressed, Travis later picks up a man (director Martin Scorsese) who appears to be as mentally unbalanced as he is. The man tells Travis to park outside an apartment building while letting the meter run. He tells Travis to look at the woman in the window and tells him that's his wife in her boyfriend's apartment. He tells Travis he plans to kill them both with a .44 Magnum.
One evening at the diner, Travis approaches and tries to express his despair to Wizard, but when Wizard makes a half-hearted response to Travis' problems with the teen prostitute and others, Travis angrily responds with: "that's just about the stupidest thing I ever heard."
Travis's thoughts turn more violent. Disgusted by the petty street crime (especially prostitution) that he witnesses while driving through the city, he now finds a focus for his frustration and buys a number of pistols from an illegal drug/weapons dealer (Steven Prince).
Travis develops an ominously intense interest in Senator Palantine's public appearances and it seems that he somehow blames the presidential hopeful for his own failure at wooing Betsy and maybe hopes to include her boss in his growing list of targets. Back at his apartment with his newly purchased guns, he begins a program of intense physical training and practices a menacing speech in the mirror, while pulling out a pistol that he attached to a home-made sliding action holster on his right arm ("You talkin' to me?"). Later, he hangs around a Palantine rally and asks a suspicious Secret Service man about joining the service before disappearing into the crowd.
In an accidental warm-up, Travis randomly walks into a robbery in a run-down grocery store and shoots the would-be thief (Nat Grant) in the face; adding to the bizarre violence, the sympathetic grocery owner (Victor Argo) encourages Travis (who has no permit for his guns) to flee the scene and then proceeds to club the near-dead stickup man to death with a steel pole.
Later, seeing Iris on the street, he follows her. Another day later, Travis asks to pay for her time, and is sent to Sport. A tense conversation ensues but Sport sends Travis up to Iris's room. Once in her room, Travis does not have sex with her and instead tries to convince her to leave this way of life behind.
The next day, Travis and Iris meet for breakfast at a local coffee shop and Travis becomes obsessed with saving this naive child-woman who thinks hanging out with hookers, pimps and drug dealers is more "hip" than dating young boys and going to school. Iris considers Travis's offer but then Sport seduces and convinces her to stay, while (seemingly) Travis spies into the window from his cab. Travis writes a note to Iris including all his money and stating that he doesn't intend to survive.
Any lingering doubt in the viewer's mind about Travis Bickle's sanity is obliterated when he is suddenly and shockingly shown to be sporting a crude Mohawk haircut at a public rally. He creeps through the crowd and prepares to assassinate Senator Palantine but is spotted by Secret Service men and flees.
Travis returns to his apartment to collect all his guns, then drives to "Alphabet City" (an area of New York's Lower East side consisting of Avenues A through E). He walks up to Sport and confronts him. When Sport flicks a lit cigarette at him, Travis says "suck on this" and shoots Sport in the belly. Storming into the brothel, Travis blows the bouncer's hand off. Sport, who has followed Travis, grazes Travis neck with a bullet (causing an arterial gush from his neck) but Travis unloads one of his guns into Sport, killing him. Travis again shoots the screaming bouncer who follows him up the stairs, slapping him. Iris' mafioso customer shoots Travis in the arm and Travis shoots his face off. The bouncer tackles Travis but Travis stabs him through the hand and finally kills the bouncer with a bullet to the brain. He then calmly tries repeatedly to fire a bullet into his own head under his chin but all the weapons are empty so he resigns himself to resting on a convenient sofa until police arrive. When they do, the blood-soaked Travis mimes shooting himself in the head and then blissfully thinks of the mayhem and carnage in his wake.
A brief epilogue shows Travis recuperating from the incident. He has received a handwritten letter from Iris' parents who thank him for saving their daughter, and the media (in newspaper clipping) hails him as a hero for saving her as well. Travis blithely returns to his job and suddenly seems on more friendly terms with the other cabbies. One night one of his fares happens to be Betsy. She comments about his saving of Iris and Travis' own media fame, yet Travis denies being any sort of hero. He drops her off without charging her. As he is driving off, he gets a strange look on his face and adjusts his cab's rear view mirror, giving the impression that his irrationality is about to break through again.