In 1988, Tokyo is destroyed by an explosion and World War III begins. Thirty-one years later, the city of Neo-Tokyo is built on a landfill in Tokyo Bay. One of its residents is Shotaro Kaneda, a delinquent who leads a bōsōzoku gang known as the Capsules. One night, the Capsules fight against the rival gang known as the Clowns. However, Kaneda’s best friend, Tetsuo Shima, nearly crashes his motorcycle into Takashi, a small esper released from a secret government laboratory by a dissident underground revolutionary organization. Takashi is captured by armed soldiers and Tetsuo is hospitalized. When Kaneda and his gang are interrogated, he encounters Kei, a member of the revolutionary group, and arranges her release along with the Capsules.
Meanwhile, Colonel Shikishima and Doctor Onishi discover that Tetsuo possesses psychic capabilities similar to Akira, a young esper who caused Tokyo’s destruction. Kiyoko, another esper, has visions of Neo-Tokyo’s destruction, and the Colonel tells Onishi to kill Tetsuo if he thinks the power may get out of control. Tetsuo flees from the hospital and meets up with his girlfriend, Kaori, and they steal Kaneda’s motorcycle. When Tetsuo and Kaori are confronted by the Clowns, Kaneda and the Capsules save them both. Tetsuo begins to suffer a psychic migraine, and is taken back to the hospital.
Saving Kei from being captured after a guerrilla attack, Kaneda is led to the rebels’ headquarters and joins them after overhearing their plans to capture Tetsuo. Meanwhile, Takashi, Kiyoko, and Masaru — another Esper — unsuccessfully attempt to kill Tetsuo. Tetsuo goes on a violent rampage through the hospital, intent on killing the espers. Kaneda, Kei, and the Colonel are unable to stop Tetsuo’s rampage. Discovering that Akira lies in cryonic storage underground next to Old-Tokyo’s new Olympic Stadium’s construction ground, Tetsuo flees.
Using Kei as a medium, Kiyoko explains that Tetsuo must be stopped, and has the youths escape from detainment before taking Kei away to fight Tetsuo. Desperate to find Tetsuo, the Colonel places Neo-Tokyo under martial law. Tetsuo accosts Yamagata and Kai, two members of the Capsules, and kills Yamagata. He lays waste to the city as he makes his way to the Stadium. Meanwhile, upon learning of Yamagata’s death from Kai, Kaneda follows Tetsuo to the stadium to exact revenge. When Tetsuo arrives at Akira’s cryonic dewar flask, he defeats Kei and exhumes the Akira vault from the ground, but discovers that Akira’s remains had previously been subjected to numerous scientific experiments.
Kaneda confronts Tetsuo with an experimental laser weapon, while the Colonel uses an orbital laser in an attempt to kill Tetsuo, but their attempts fail. Tetsuo pulls the orbital weapon into the atmosphere and synthesizes an artificial arm to replace his severed arm while studying Akira’s organs. When Kaori arrives, Tetsuo’s psychokinetic powers cause him immense pain. The Colonel explains that the espers’ migraine-controlling drugs administered to Tetsuo are to stunt the evolution of uncontrollable abilities but Tetsuo nearly kills the Colonel. However, Kaneda saves the Colonel and he and Tetsuo fight. Unable to control his powers, Tetsuo transforms into a giant mass, engulfing Kaneda and killing Kaori.
The espers awaken Akira, who had merely grown beyond the requirement of a coherent biological form. Manifesting himself from the canisters, Akira reunites with his friends. Using his psychic powers, Akira creates a ball of light, which he uses to contain Tetsuo. As Akira confronts Tetsuo, the espers hurry to teleport the Colonel to safety and Takashi jumps into the light to rescue Kaneda. The other espers join Takashi, deciding that it will take the trio to save Kaneda, aware they might be unable to return. Kaneda experiences Tetsuo’s and the espers’ childhood memories, including how much Tetsuo trusted Kaneda and how the children were first studied before Tokyo’s destruction.
The espers remove Kaneda from the destruction and tell him that Akira will be taking Tetsuo to safety; Kiyoko implies that Kei is beginning to develop her own psychic powers, and this is confirmed when Kei calls Kaneda out telepathically. Akira’s psychic power destroys most of Neo-Tokyo, and leaves a void that is quickly filled by the ocean. Doctor Onishi is killed when his research laboratory is crushed. Kaneda awakens to discover that Kei and Kai have survived, and they drive away into the city. The Colonel walks out of the tunnel that the espers teleported him to and watches the sun rise over the destroyed city. Tetsuo comes into full control of his powers as he initiates a Big Bang in another dimension, uttering the words, “I am Tetsuo.”