In 1988, a singularity destroys Tokyo. By 2019, Tokyo is rebuilt as Neo-Tokyo, which is plagued by corruption, anti-government protests, terrorism, and gang violence. During a violent protest, the hot-headed Shōtarō Kaneda leads his vigilante bōsōzoku gang, the Capsules, against the rival Clown gang. Kanedas best friend Tetsuo Shima inadvertently crashes his motorcycle into Takashi, an esper who escaped from a government laboratory with the aid of a resistance organization. Assisted by esper Masaru, Japan Self-Defense Forces Colonel Shikishima recaptures Takashi, takes Tetsuo with him, and arrests the Capsules. While being interrogated by the police, Kaneda meets Kei, an activist belonging to the resistance movement, and tricks the authorities into releasing her and his gang.

At a secret government facility, Shikishima and his head of research Doctor ÅŒnishi discover that Tetsuo possesses powerful psychic abilities similar to Akira, the esper responsible for Tokyos destruction. Takashis fellow esper Kiyoko forewarns Shikishima of Neo-Tokyos impending destruction, but the citys parliament dismisses Shikishimas concerns, leading him to consider killing Tetsuo to prevent another cataclysm. Meanwhile, Tetsuo escapes from the hospital, steals Kanedas motorcycle, and prepares to run away from Neo-Tokyo with his girlfriend Kaori. After an ambush by the Clowns, the Capsules save Tetsuo and Kaori, but Tetsuo begins suffering intense headaches and hallucinations and is taken back to the hospital.

Kaneda joins Keis resistance cell after overhearing their plan to rescue Tetsuo and the other espers. At the hospital, the espers try to assassinate Tetsuo, but the attempt is thwarted. He then searches for them in a fit of rage, awakening his psychic powers further as he easily kills hospital staff. Kaneda, Kei, and the resistance group infiltrate the hospital, and Kiyoko draws them into Shikishima and the espers futile attempts to stop Tetsuo. Kiyoko tells Tetsuo that Akira can help him, located in cryonic storage beneath the Olympic Stadiums construction site. Tetsuo then flies out of the hospital to search for him.
Kei, used by Kiyoko as a medium to stop Tetsuo, breaks her and Kaneda out of military custody. Shikishima stages a coup détat against the Neo-Tokyo government and directs all of its military forces to destroy Tetsuo. At the Capsules former hangout Harukiya Bar, Tetsuo confronts gangmates Yamagata and Kai over Kanedas bike, but Tetsuo kills Yamagata when they refuse to give it to him. Kai relays the news to Kaneda, who vows to avenge his friend. Tetsuo rampages through Neo-Tokyo, arriving at Akiras cryogenic storage dewar under the stadium. Kiyoko has Kei fight Tetsuo, but he defeats her and exhumes Akiras remains. Kaneda duels Tetsuo with a laser rifle, and Shikishima fires an orbital weapon at him. While the latter destroys his arm, neither is able to stop him.

Shikishima and Kaori approach the stadium, where Tetsuo, now with a robotic arm, is in great pain and losing control over his powers. Kaori attempts to restrain Tetsuo while Shikishima offers to return him to the hospital, heal his injuries, and help control his abilities. Kaneda arrives and continues his duel with Tetsuo. Tetsuo, weakened from the missing arm, mutates into a gigantic mass of flesh, engulfing Kaneda and killing Kaori. As the mass grows, Akira awakens to create a singularity that draws Tetsuo and Kaneda into another dimension. After teleporting Shikishima to a safe distance, the espers agree to rescue Kaneda, knowing that they will not be able to return to this dimension.

In the singularity, Kaneda experiences Tetsuos and the espers childhood, including Tetsuos dependence on Kaneda during their childhood, and how the children were trained and altered before Tokyos destruction. The espers return Kaneda to his world, informing him that Akira will take Tetsuo to safety and that Kei is developing psychic powers. Right after witnessing the birth of a universe, Ōnishis laboratory crushes him to death. After consuming most of Neo-Tokyo, the singularity disappears and the crater left in its place is flooded. Kaneda discovers that Kei and Kai have survived, and they ride off into the ruins while Shikishima watches the sunrise. Tetsuo introduces himself at another unspecified level of existence and triggers a Big Bang.