Ethan Hunt (Tom Cruise) has retired from being an IMF team leader, instead opting for a quiet life with his fiancée Julia (Michelle Monaghan), a hospital nurse (who was the captive in the opening sequence). During their engagement party, Ethan is contacted by IMF Operations Director Musgrave (Billy Crudup) who provides him with a disposable camera. After viewing a video hidden in the camera, he finds out Musgrave wants him to rescue Agent Lindsey Farris (Keri Russell), Ethan's protégé, who has been captured in Berlin by Owen Davian (Philip Seymour Hoffman), a prominent dealer in the international black market (the captor from the opening). He reluctantly agrees to participate in the mission and meets the team which has been selected for him, consisting of Declan Gormley (Jonathan Rhys-Meyers), Zhen (Maggie Q), and his old partner, Luther Stickel (Ving Rhames).
The team assaults an enemy stronghold in Berlin and extracts Agent Farris successfully, but she dies during their escape when an explosive capsule placed inside her head detonates. After Lindsey's funeral, Ethan is notified of a "package" sent to him by Lindsey, and discovers that it is a microdot hidden under the stamp in a blank postcard. Ethan discusses its possible importance with Luther and both decide to keep its existence a secret.
Using information recovered from a laptop in the Berlin mission, Ethan then decides to go after Davian himself, targeting him at a meeting in Vatican City, where a lucrative transaction involving a mysterious object, codenamed "The Rabbit's Foot", is apparently taking place. Neither of Ethan's superiors, directors Brassel (Laurence Fishburne) or Musgrave, has authorized the mission. Before leaving, Ethan reassures Julia of their relationship, and promptly marries her at the hospital in a small ceremony. The team then arrives in Rome and sets off their elaborate plan to abduct Davian, barely avoiding disaster in the process. The operation succeeds nonetheless. Ethan interrogates Davian on the flight home. However he is angered by Davian's quiet but confident threats of killing his wife, and attempts to throw him off the plane before being talked out of it by Stickel.
While transporting Davian across the Chesapeake Bay Bridge-Tunnel in a convoy, Luther hands Ethan a laptop computer and plays the video message from the decoded microdot: Lindsey had discovered that Director Brassel is a mole, who has been leaking information to Davian about IMF operations. Suddenly, Ethan and his team are attacked by foreign mercenaries who, using a UAV drone, manage to extract Davian. Remembering Davian's threats to kill his wife, Ethan immediately rushes to the hospital where Julia works. He arrives barely moments too late and finds that Julia has already been abducted. At that moment of despair, Ethan receives a call from Davian with a proposition; he must retrieve the "Rabbit's Foot" from a facility in Shanghai within 48 hours, or his wife will be killed. Ethan, anxious to begin his mission to rescue his wife is abruptly taken into custody by the IMF and accused of masterminding the ambush. However, he manages to escape with help from Musgrave, who intercepted Ethan's call from Davian, and instructs Ethan to go to Shanghai.
In Shanghai, Ethan reunites with his team once more and manages to infiltrate the heavily guarded building containing the Rabbit's Foot and steals it. Ethan then goes to the established meeting place where Davian is waiting. Told to "ask no questions", he is made to drink a substance which knocks him out. He awakes in a seedy room where Davian injects an explosive charge like the one that killed Lindsey into his head. The scene shown in the prologue then ensues: Julia and Ethan are bound to chairs and Davian threatens to kill Julia if he is not told the location of the Rabbit's Foot. Ethan, in panic, insists that he has delivered it. However, after counting to ten, Davian executes Julia.
After Davian leaves, Musgrave enters, revealing himself as the traitor and explains the situation to a stunned Ethan; Davian will sell the Rabbit's Foot to known Middle Eastern enemies of the United States, the resulting attack being anticipated and controlled to generate only 'acceptable losses' - the concept of a "false flag" attack taken to the next level. This will then justify a massive retaliation that would result in an internationally supported hostile takeover of the region. He shows Ethan that the dead "Julia" was actually one of Davian's incompetent personnel wearing a mask, used to make sure that Ethan had brought the real Rabbit's Foot; Julia is still alive. Ethan escapes by biting Musgrave's arm before attacking him and taking his phone, which is used to track down Julia's location. Instrumental in this is the assistance of Benji (Simon Pegg), an IMF laboratory technician.
After a furious run through the neighborhood, Ethan finally finds Julia, but before he can free her Davian activates the bomb in Ethan's head. The result is a splitting noise in Ethan's head which renders him incapable of thinking properly and defending himself. Davian then begins to savagely beat Ethan, but just as Davian prepares to kill Julia, Ethan manages to make an impressive comeback and hurls Davian out of the window. Davian is killed when a truck runs over him and Ethan during the scuffle--Ethan, on the bottom, is clear of the truck. Unable to find a defibrillator, Ethan loosens power cables to be able to put electricity on his body, to deactivate the bomb in his head, and quickly teaches Julia how to shoot his Beretta pistol. Julia turns on the power which seemingly kills Ethan, after which Musgrave attacks her. After killing Musgrave, she successfully resuscitates Ethan with CPR, and the two walk out with the Rabbit's Foot as Ethan proceeds to tell Julia the truth about his secret life.
Back at headquarters, Ethan is congratulated for his heroic actions, and then leaves for his honeymoon with Julia, with the blessing of his applauding teammates and promises for another mission which the White House is keen to contact him about.