The film opens with a man holding another man over a building ledge by his tie. The man holding the other man is asked his name after he says that he wants to tell a story. The man is Oh Dae-su - a Korean businessman, husband and father.
Drunken Dae-su as he sits in a local police station while his friend, Joo-Hwan, bails him out. Dae-su calls his daughter on a public phone, as it is her birthday. Joo-Hwan takes the phone to also wish Yeun-Hee a happy birthday, and Oh Dae-su's wife takes the phone to ask for her husband's speedy return. Joo-Hwan turns to get him and realizes Oh Dae-su had disappeared.
Days later, Dae-su awakens confined in a shabby hotel room, with no explanation of where he is or why he is there. He is not allowed visitors, nor phone calls, and is fed only fried dumplings through a narrow slot. Experiencing hysteria and hallucinations during his captivity, he frequently attempts suicide but is often gassed into unconsciousness.
While wandering the streets of the city, Dae-su meets Mi-do (Kang Hye-jeong), a sushi chef at a local restaurant, who takes pity on him when he passes out and brings him to her home. After receiving a phone call from the still unidentified former captor, Dae-su resolves to find him and locates the restaurant that provided the fried dumplings during his imprisonment, following the delivery boy to his former prison.
The next day, the man, named Woo-jin (Yu Ji-tae) reveals himself as Dae-su's kidnapper and offers Dae-su the chance to play a game, where he must discover Woo-jin's motives behind Dae-su's kidnapping. Mi-do will die if he fails, but if he succeeds, Woo-jin will kill himself. Later, Dae-su discovers he and Woo-jin briefly attended the same high school. During the investigation, Dae-su and Mi-do grow closer together and become physically and emotionally intimate, culminating in their having sex. Chasing his memories, Dae-su remembers spying on Woo-jin's incestuous relationship with his sister, Soo-ah (Yun Jin-seo) and, unaware of their genetic relationship, inadvertently spreads the rumor before transferring to another school in Seoul. Eventually, the rumor grew to include a pregnancy, which may or may not have been real, leading to Soo-ah's death, assumed to have been a suicide.
Woo-jin instead gives Dae-su a final gift, a photo album containing Dae-su's family portrait. As Dae-su flips through the album, he witnesses his daughter grow older in the pictures, until discovering that Mi-do is actually his daughter.
Woo-jin reveals that Dae-su's kidnapping, incarceration, the murder of his wife and the upbringing of his daughter were all orchestrated to cause Dae-su and Mi-do to commit incest. It is also revealed that hypnosis and post-hypnotic suggestion were involved with Dae-Su's imprisonment, and had been performed on Mi-Do as well, and that the warden, thought to have betrayed Woo-Jin to Dae-su, was actually still under his payroll. Dae-su is left horrified at the fact that he and his daughter have become romantic lovers. Dae-su begs Woo-jin to conceal the secret from Mi-Do, groveling for forgiveness before slicing out his own tongue and offering it to Woo-jin as a symbol of his silence.
Woo-jin agrees to spare Mi-do from the traumatic knowledge and leaves Dae-su in his penthouse with the words "My sister and I loved each other despite knowing everything. Can you two do the same?". As Woo-jin rides alone in the elevator, he is struck by the vivid memory of his sister's death, a suicide in which he was complicit, and shoots himself in the head.
In the epilogue, Dae-su sits in a winter landscape, where he makes a deal with the same hypnotist who had hypnotized him while imprisoned, asking for her help to allow him to forget the secret. She reads his pleas from a handwritten letter and, touched by his words, begins the hypnosis process, lulling him into unconsciousness. Hours later, Dae-su wakes up, the hypnotist gone, and stumbles about before finally meeting with Mi-do. They embrace, and the soft spoken Mi-do tells Dae-su that she loves him. His broad smile slowly disappears into an odd expression, neither obviously happy nor unhappy (also alludes to the motif phrase "laugh, and the world laughs with you; weep, and you weep alone" that is referenced several times throughout the movie).
