On July 23, 1967, the Detroit Police Department stage a raid on an unlicensed club during a celebration for some black veterans returning from the Vietnam War. While suspects are being arrested, a mob forms and begins throwing rocks at the officers before looting nearby stores and starting fires, beginning the 12th Street Riot. With local authorities, elected representatives, and emergency services unable to maintain order, Governor George W. Romney authorizes the National Guard and President Lyndon B. Johnson authorizes Army paratroopers to enter Detroit to provide assistance. On the second day of rioting, officers Krauss and Flynn pursue a fleeing looter, and Krauss kills the man with a shotgun against orders, but is allowed to remain on duty while his superiors debate filing murder charges.
Seconds before The Dramatics, a black R&B vocal group, take the stage for a performance that they hope will lead to a recording contract with Motown, the police shut down the venue due to rioting outside. The bus the group gets on is attacked by rioters, and, in the ensuing chaos, they get split up. Larry, the lead singer, and his friend, Fred, rent a room in the nearby Algiers Motel—in a detached annex building—to get off the streets. They meet two young white women, Julie and Karen, who introduce them to Carl, Lee, Aubrey, and Michael. Carl and Lee stage a prank using a starter pistol, upsetting Julie and Karen, who go to the room of Greene, a Vietnam War veteran, while Larry and Fred return to their own room.
Melvin Dismukes, a private security guard, is at a grocery store near the Algiers to protect it from rioters. Some guardsmen pull up outside, and Carl decides to fire several blanks at the troops to frighten them. The shots are mistaken for a sniper attack, and members of the National Guard and the state and local police descend upon the Algiers annex to investigate. Krauss guns down a fleeing Carl immediately upon entering the building and plants a knife next to the body.
They task force lines up everyone they find in the annex against the wall, demanding to know who the sniper was. No weapon is found, but Krauss begins to terrorize and beat the suspects while interrogating them. Dismukes arrives and, although he does not like what he sees, does not challenge Krauss openly. As the situation spirals out of control, most of the state police and national guardsmen leave to avoid being associated with it, but no one intervenes or reports the abuse.
One by one, Krauss orders several suspects to be moved to different rooms and subjected to mock executions in order to terrify the others into confessing. Julie and Karen are taken to an upstairs room when Karen begins screaming, and Julie's clothes get torn off. Disgusted, one of the remaining Guardsman gets them released from custody. Not understanding the executions were supposed to be faked, officer Demens actually kills Aubrey, and a worried Krauss offers to let the remaining suspects leave if they swear to keep silent. Greene and Larry agree and are let go, but Fred refuses and is killed.
As the riots die down, Dismukes is brought to the police station, where he is shocked to find himself a suspect in the investigation into the deaths. Krauss, Flynn, and Demens are also implicated after Demens and Flynn make a compromising statement.
Two years later, at the trial, the testimony of the survivors of the incident is picked apart by the defense attorney. When the judge finds the officers' statements to be inadmissible because they were not properly advised of their Miranda rights, the prosecution's case falls apart. The all-white jury acquits the defendants.
Larry rethinks his singing career due to the trauma he experienced, and watches as his former bandmates achieve success without him. Living in squalor, he ultimately gets a job as choir director at a small church.
Closing text reveals that Dismukes subsequently moved to the suburbs to escape death threats and resumed work as a security guard, the police officers never returned to active duty, and the families of some of the victims had limited success with civil lawsuits.
