At a plush cocktail party at Reisner Institute, a government think tank based in Redmond, Washington DC, the guests and scientists present are enjoying themselves. One such scientist, Dylan, suddenly begins to become manipulated by an invisible force, which creates a scene to the guests and drags the scientist into the nearby bathroom and proceeds to brutally beat and throw Dylan around the room. Dylan apparently knows who it is, and begs the invisible man not to kill him, as he "doesn't have it", but the invisible man persists as he's "getting worse" and he's "running out of time". Though he does not know how to make more, Dylan mentions that another scientist, Maggie Dalton (Laura Regan), knows the formula. Seemingly accepting this, the invisible man releases Dylan and tells him not to tell anyone he was here, to which he agrees. No sooner has he left, than Dylan attempts to call someone on his cell phone, but the invisible man, who only pretended to leave to see if Dylan would stay silent, smashes the phone on the ground, and slashes Dylan's neck with the broken circuit board, killing him.
The police arrive at the laboratory to conduct an investigation, but the military supervisor of the laboratory, Colonel Gavin Bishop (William MacDonald), insists it is an internal military situation and the police have no jurisdiction over the crime, and refuses to relent even when one of the detectives, Frank Turner (Peter Facinelli), points out that they have no experience conducting a proper criminal investigation.
Fearing another attack on the remaining scientists, the lab company owner, Dr. William Reisner (David McIlwraith), employs Turner and his partner, Detective Lisa Martinez (Sarah Deakins), to protect Maggie (despite the military forcing the police out of the investigation), but refuses to divulge any information to the detectives on the nature of the work they are doing, which includes refusing to tell them that an invisible killer is on the loose.
Turner and Lisa, after gaining Maggie's reluctant cooperation, stand guard outside of Maggie's house. The invisible man watches from inside a nearby bedroom window where a teenage couple are working on a home sex video. Spotted by the night vision camera, he leaves the room and heads outside. When Lisa opens the door to let the cat in, the invisible man takes advantage of the distraction to sneak past Lisa into the house. Just as the invisible man reaches the study where Maggie is working, Lisa, having sensed something wrong, traces the source to the invisible man, who uses a lamp's wire to throttle her. Maggie and Turner promptly race to Lisa's aid, but it is too late.
Suddenly, a large battalion of military commandos appears and storms the house, grabbing Turner and Maggie, and use night vision cameras and weapons to target and corner the invisible man inside the study. Outside, Turner confronts Bishop, as he has realised that he and Lisa were nothing more than pawns, to lure the invisible man to the house where the commandos were to terminate him to prevent the lab's work being exposed. Suddenly, several stun grenades are set off by the invisible man around the house, blinding the commando's sensors and, combined with his own invisibility, the man escapes in pursuit of Turner and Maggie. Closely pursued, Turner and Maggie force their way down a crowded street and run across a busy road. The man is poised to catch up to them, but a speeding car strikes the man. Badly injured, the invisible man reluctantly retreats to his abandoned apartment and injects himself with a mysterious blue liquid that disguises his now-visible wounds.
Maggie is taken into protective custody by the police, where Frank's superior and friend; Captain Tom Harrison (Bruce Dawson), though sympathetic with Turner's desire for revenge, has received "higher orders" to have Maggie transferred to military custody and then intends to let the case go. Disgusted with his friend's attitude, especially when he knows Tom knows who the invisible man was, helps Maggie escape from the police station and, after stealing a car, flee together. When safe, Turner demands to know everything, as he wants to know more about the invisible man for the purpose of avenging Lisa's death.
Meanwhile, Bishop and Reisner, knowing their work and careers would end if Maggie talks, make Turner into a fugitive.
Maggie does indeed relent and tells the whole story in a flashback: Five years before, a team of molecular biologists broke the code for human invisibility, but almost overnight something went seriously wrong and all but two of the team were killed, and as such, the program was scrapped. One year later, the Reisner Institute was contracted by the Pentagon to restart the experiments, with covert funding from the Department of Defense, and the operations was codenamed "Silent Knight", and the idea was to create the ultimate national security weapon: an undetectable soldier. Reisner managed to reproduce the original test results, but a flaw in the invisibility code was found; the serum turns human tissue invisible, but it also has horrible side effects. Simply put, the serum allows light to pass directly through a person. The radiation damages the cells and causes physical and mental degradation, and over time, it kills them. Maggie was called in to correct the defects, and developed a compound to protect a person from the radiation, which was called "the Buffer".
Eventually the project was cleared for human testing, and one specific soldier, Michael Griffin (Christian Slater), a highly-distinguished Special Forces operative and Bishop's protege, and served in Afghanistan, Iran and Iraq (where he was also disgraced for committing war crimes) and happily volunteered for the opportunity to become the first invisible soldier for the United States Army. The test, in which Dylan was revealed to be the one who administered the serum into Griffin's bloodstream, to turn him invisible succeeded and the results were favorable, but when the Buffer was injected into Griffin's system, it somehow failed and Griffin suddenly died, and Maggie was fired for failing. Maggie believes Griffin faked his own death so he can use his powers without restraint, but he needs the antidote to the radiation before he dies.
Back at the Institute, Reisner and Bishop argue that Turner is not the only threat out there... there is also Griffin, but Bishop insists he can bring him in, as he knows Griffin has always worked on the "edge of anarchy" and when he goes into combat he "goes deep" and "goes black". Reisner pointedly asks why would he listen to him, Bishop says "he's still a soldier and I'm still his CO", but reluctantly agrees with Reisner to not let Griffin get the Buffer or Maggie.
Maggie receives a text message from an unknown stranger named Ludlow, and she explains to Turner that Ludlow has been contacting her over the last several weeks, giving her warnings and subtle pieces of advice about the program. Needing a way to fight Griffin, Turner uses his street contacts to find Ludlow's hiding place, and Turner and Maggie eventually find him and discover Ludlow (Darcy Laurie), previously known as Timothy Laurents, was a soldier enlisted into the program before Griffin but after the first one (Sebastian Caine from the first Hollow Man movie), and as such he fled the program, but due to the radiation is slowly dying (already with three rare cancers, any number of failing organs and a permanent intolerance to light, and he's "just a little more dead" and "a little more visible" every day).
Ludlow has been keeping track of Griffin, and reveals the true story to his supposed "death" and the program itself: Operation Silent Knight was never about national security, but political security, and as such Griffin was intentionally not given the Buffer, as Bishop and Reisner wished to use Griffin to assassinate the United States Government's political enemies (beginning with Senator Paul Hayes, who died of acute asthmatic asphyxiation on April 21, though his bedside inhaler, mere centimeters away, remained untouched. Next, Ninth-Circuit Judge Wyatt Jennings died of broken neck when his "clumsy feet" caused him to fall down the courthouse staircase on April 27, despite countless witnesses. Next, Retired CIA Operations Chief Warren Eshingburge drowned after falling off his fishing boat). Griffin's victims then became more "randomized", and as such Griffin has begun targeting ordinary civilians; such as a soccer coach, a truck driver, and an investment banker all over the last two weeks in the North Western United States. Griffin must be stopped.
Meanwhile, Griffin makes his way through the Institute, murdering all the army guards and employees in his way (sparing a friendly blind female worker whom interacts with him and does not know he is invisible) and proceeds to take Bishop hostage. Bishop attempts to reason with his protege, as the Silent Knight program needed a "fail safe" to ensure its integrity, and Griffin no longer needs Maggie and he can get Griffin the Buffer if he turns himself in. Griffin, however, does not trust him. Getting desperate, Bishop shouts that if not for his support, Griffin would have been court martialed for what he did in Iraq, and stabs him with a pen. Griffin responds by stabbing Bishop with the same pen in the eye, killing him, and locates Ludlow on Bishop's computer. Griffin arrives at Ludlow's hideout and attacks Turner, but Ludlow saves him. In a lightning maneuver, Griffin snaps Ludlow's neck. Turner and Maggie use this distraction to escape.
Griffin decides to make them return by kidnapping Heather Dalton (Jessica Harmon), Maggie's sister. Realising they have no choice, they reluctantly go to the train station where Griffin is hiding. Griffin silently captures Maggie and proceeds to try to turn her invisible so he can escape unnoticed, but Turner interrupts him just in time. After a short fistfight, Griffin escapes with Maggie as his prisoner, and Turner is left at the mercy of Reisner and his guards, who have come pursuing Griffin.
Reisner pursues an invisible force outside, but he is soon captured and held in a wrist-lock. Thinking it is Griffin, Reisner says he can have the Buffer sent to them within 10 minutes and asks him to surrender, addressing him as Michael. The figure replies "I'm not Michael". It is Turner, who used Griffin's discarded syringe to hide from Reisner's guards. Reisner, upon being released by Turner, backs away from him too far and is hit by a speeding car and killed.
Griffin takes Maggie to her old college laboratory, so that she can create the Buffer for him. After Maggie supposedly makes enough to save his life, Griffin, still suspecting foul play, forces Maggie to inject herself with it first, to make sure it is not fake. After proving it will not kill him, Griffin injects himself with another dose of Buffer. With his survival assured, Griffin, wanting to make sure his secret will stay secret, tries to kill Maggie, but Turner attacks and knocks Griffin out of the laboratory window just before he can. Turner runs outside to see if Griffin died, but he has survived and Griffin attacks him and knocks Turner unconscious. With no one left to help her, Griffin tries to kill Maggie again, but stops when he finds he is slowly turning visible. Maggie reveals to a shocked Griffin that he has, indeed, been poisoned as Buffer is based on rat poison, and Maggie deliberately left the doses she made from the poison just toxic enough to kill them both, and loses consciousness. Enraged, Griffin takes a shovel and attempts to kill Maggie with it, but a now-conscious Turner stops him and knocks him to the ground.
At his mercy, Griffin asks "Do you feel it yet, Turner? What it does to you?" as he wants to know if Turner will end up like him. Turner calmly replies "Not yet", and stabs and kills Griffin with the shovel. Turner looks down at Griffin's bloodied corpse, thinks, and then says "now I do". Turner gathers Maggie in his arms and then carries her away for medical attention to the poison, leaving Griffin's body outside in the rain.
A few days later, Maggie is recovering in hospital and is poised to be released. Heather tells Maggie that Turner has not been found. Maggie insists that Turner will come back to her, as she knows he needs her. Outside her window, both women are being watched by an invisible man in a hood who proceeds to walk away.