Holly Martins, an American author of Western pulp novels, arrives in the British sector of Allied-occupied Vienna seeking Harry Lime, a childhood friend who has offered him a job. However, Martins is told that Lime was killed by a car while crossing the street. At Lime's funeral, Martins meets two Field Security Section men, part of the ICPO: Sergeant Paine, a fan of Martins' novels, and Major Calloway. Afterward, Martins is asked to lecture at a book club a few days later. He then meets a friend of Lime's, "Baron" Kurtz, who tells Martins that he and another friend, Popescu, carried Lime to the side of the street after the accident, and that, before he died, Lime asked them to take care of Martins and Lime's girlfriend, actress Anna Schmidt. As Martins and Anna query Lime's death, they realise that accounts differ as to whether Lime was able to speak before his death, and how many men carried away the body. The porter at Lime's apartment tells them that he saw a third man helping. He offers to give Martins more information but is murdered before they can speak again; Martins and Anna flee the scene after a mob begins to suspect him of the murder. When Martins confronts Major Calloway and demands that Lime's death be investigated, Calloway reveals that Lime was stealing penicillin from military hospitals, diluting it, and then selling it on the black market, injuring or killing countless people. Martins agrees to drop his investigation and leave. An inebriated Martins visits Anna and confesses his feelings for her. A man crosses the street towards her front door, but moves away after seeing Martins at the window. After leaving, Martins walks the streets until he notices Anna's cat and realises someone is watching from a darkened doorway. In a momentary flash of light, Martins sees that the man is Lime. Martins calls out, but Lime flees and vanishes. Martins summons Calloway, who realises that Lime has escaped through the city's sewers to the Soviet sector. The British police exhume Lime's coffin and discover that the body is that of a hospital orderly who had been assisting him. Anna, who is Czech, is to be sent to the Soviet sector after the British police discover that she has a forged Austrian passport, and is questioned again by Calloway. Martins goes to Kurtz and asks to see Lime. Lime and Martins meet and talk as they ride the Wiener Riesenrad. Lime speaks cynically of the insignificance of his victims' lives and the personal gains to be earned from the city's chaos and deprivation. Martins realises that Lime sold Anna out to the Soviet authorities for his own benefit. Lime obliquely threatens Martins as he is now the only 'proof' that Lime is alive, however Martins retorts that the authorities are aware of the false burial. Lime then offers Martins a chance to join in on his scheme before leaving quickly. Calloway asks Martins to help arrest Lime; he agrees provided that Calloway will arrange for Anna to leave Vienna rather than be handed over to the Soviets. The British authorities arrange for Anna to take a train to Paris, but she spots Martins, who has come to observe her departure, at the station. After persuading Martins to reveal the plan to capture Lime, she leaves in order to warn him. Exasperated, Martins decides to leave Vienna; on the way to the airport, Calloway stops at a hospital to show Martins children dying of meningitis who were treated with Lime's diluted penicillin, which convinces him to stay and assist in capturing Lime. Lime arrives at a café in the international zone to meet Martins, but Anna is able to warn him that the police are closing in. He flees into the sewer, with the police following him underground. Lime shoots and kills Sgt Paine, but Calloway shoots and badly wounds Lime. Lime drags himself up a cast-iron stairway to a street grating but cannot lift it. Martins, armed with Paine's gun, runs after Lime finding him beneath the grating where they stare at each other. Calloway, realising Martins has chased Lime, shouts that Martins must not take any chances and shoot on sight. Lime nods his head slightly at Martins. Calloway follows down the tunnel as a single shot is heard. Martins attends Lime's second funeral at the risk of missing his flight out of Vienna. He waits on the road to the cemetery to speak with Anna, but she walks past without glancing in his direction.

Up-and-coming Manhattan press agent Sidney Falco scans the New York Globe for the column of J.J. Hunsecker, a media kingpin whose journalism and radio show dominate the entertainment world. For the fifth day, J.J. has not publicized any of Sidney's clients, as he is protective of his 19-year-old sister Susan and has asked Sidney to end her affair with jazz guitarist Steve Dallas. Sidney has been unsuccessful. Steve is performing at the Elysian Room with his group as Sidney argues with his uncle Frank D’Angelo (who is Steve's manager), who has promised Steve and Susan will part. Learning from cigarette girl Rita that Susan is awaiting Steve behind the club, he interrupts them. Steve accuses him of "scratching for information like a dog." Rita asks Sidney to help her keep her job, at risk because she refused to sleep with J.J.’s competitor, Leo Bartha. Sidney secures a date with Rita. Questioned by Susan, he reassures her that J.J. is a close friend. J.J. greets his informer Harry Kello, a corrupt NYPD lieutenant indebted to J.J. for saving his job after Kello beat a suspect. J.J. gives Sidney an ultimatum to destroy Steve and Susan's relationship. Sidney attempts to blackmail Leo, threatening to expose his affair with Rita unless Leo prints a gossip item that Steve is a Communist who smokes marijuana. Leo chooses his journalistic integrity, which his wife Loretta praises as his first decent act in years. Sidney bribes another columnist, Otis Elwell, with the promise of a sexual favor from an "available" woman. Rita initially objects, but ultimately assents to Sidney's plan in order to stay employed. The smear appears in Otis's column and the quintet is fired. As planned, J.J. gets Steve rehired with a phone call in front of Susan, but Steve rebukes him for his malignant influence on society. Susan breaks up with Steve to save him from J.J.'s vengeance. J.J. orders Sidney to plant marijuana on Steve; Sidney balks, saying he can accept a dog collar but not a noose. He acquiesces when J.J. offers to let Sidney write his column for three months while he vacations with Susan. Sidney slips marijuana into Steve's coat pocket. Kello assaults Steve, who is hospitalized. Sidney celebrates, but is summoned to J.J.'s penthouse where Susan is about to commit suicide by jumping from the balcony. He takes her to her bedroom to rest. Arriving to find the two holding each other, J.J. scolds him. Realizing that Susan set him up, Sidney reveals that J.J. conspired to frame Steve. He leaves, vowing to reveal the truth and telling J.J. that Susan is lost to him. J.J. calls to tell Kello that Steve is innocent, ordering Sidney be arrested for planting evidence. Kello ambushes Sidney and beats him. J.J. begs Susan to stay as she packs; she says death is preferable to living with him. J.J. watches from the balcony as she strides into the coming dawn.

Along the U.S.–Mexico border, a time bomb placed inside a vehicle explodes, killing two people. Mexican special prosecutor Miguel Vargas, who is honeymooning in town with his new American wife Susie, takes an interest in the investigation, which is being conducted by veteran police captain Hank Quinlan and his devoted, admiring, fanatically loyal assistant, Pete Menzies. Quinlan is a recovering alcoholic and an anti-Mexican bigot. He injured his leg long ago, and now walks with a prosthetic "game" leg and a cane. He implicates Sanchez, a young Mexican man secretly married to the victim's daughter. During the interrogation at Sanchez's apartment, Menzies finds two sticks of dynamite in a shoe-box in the bathroom. Vargas, who had accidentally knocked over the shoe-box a few minutes earlier and found it empty, accuses Quinlan of planting the dynamite, and begins to suspect that many of his previous convictions were similarly tainted. Quinlan angrily dismisses Vargas's allegation. Vargas learns that Quinlan had recently purchased dynamite and presents proof of this to Adair, the District Attorney, who resists investigating further. "Uncle" Joe Grandi, the acting leader of a crime family Vargas has been investigating, makes common cause with Quinlan against Vargas, and plies Quinlan with bourbon whiskey, causing him to break his sobriety. Grandi orders his family to capture and inject Susie with heroin, and while she is unconscious, he and Quinlan lock her in a hotel room. Quinlan then murders Grandi and leaves the body there with Susie; however, drunk and exhausted, he carelessly also leaves his cane in the room with them. When Susie wakes up and sees the body, she screams for help, and gets arrested on suspicion of the murder, which infuriates Vargas. Searching the room, Menzies finds Quinlan's cane, and realizes that Quinlan is the real killer. Vargas, reviewing Quinlan's past successes, confirms his suspicion that Quinlan has planted evidence in many of the cases. He confronts Menzies, who sadly agrees to work with him to expose Quinlan, by wearing a wire and getting a confession. Quinlan hears an echo from Vargas' recording device, and realizes that Menzies is betraying him. He shoots and mortally wounds Menzies. He then aims his gun at Vargas, but the dying Menzies shoots Quinlan before he can fire. Susie is exonerated and reunited with Vargas. As Quinlan dies, it is revealed that Sanchez has confessed to the original bombing.