In 1982, a giant extraterrestrial spaceship arrives and hovers over the South African city of Johannesburg. An investigation team finds over a million malnourished aliens inside, and the South African government relocates them to a camp called District 9. However, over the years, it turns into a slum, and locals often complain that the aliens—derogatorily called "prawns"—are filthy, ignorant lawbreakers who bleed resources from humans.
Following unrest between the aliens and locals, the government hires Multinational United (MNU), a giant weapons manufacturer, to relocate the aliens to a new camp outside the city. Piet Smit, an MNU executive, appoints an MNU employee and his son-in-law, Wikus van de Merwe, to lead the relocation. Meanwhile, three aliens, Christopher Johnson, his young son CJ, and his friend Paul, search a District 9 garbage dump for alien fuel in Prawn technology, which Christopher has had them spend the last 20 years synthesizing enough of to enact his plan. They finally finish in Paul's shack as the relocation begins, but when Wikus comes to serve Paul a notice, he finds the hidden container with the fuel and accidentally sprays some of it in his face while confiscating it. Koobus Venter, a cruel MNU mercenary, kills Paul.
Wikus begins mutating into a Prawn, starting with his left arm injured after the fuel exposure. He is immediately taken to the brutal MNU lab, where researchers discover his chimeric DNA grants him the ability to operate Prawn weaponry, which is biologically restricted for them. Wanting to capture this human/alien hybridity before Wikus fully transforms, Smit orders Wikus' body to be vivisected and harvested for its profitable properties. Wikus, however, overpowers the lab personnel and escapes. While Venter's forces hunt for him, a smear story is broadcast, one that reaches Wikus' wife and Smit's daughter, Tania, claiming Wikus is a wanted fugitive who has contracted a contagious disease from copulating with aliens.
Wikus takes refuge in District 9, finding Christopher and the spaceship's concealed command module dropship underneath his house. Christopher explains to Wikus that the confiscated fuel is crucial to his plan of reactivating the dropship, and if he can get them in the dropship to the mothership, he can cure Wikus. Wikus attempts to acquire weapons from the District 9 Nigerian arms dealer, Obesandjo, who wants to eat Wikus's alien arm to gain alien abilities. Wikus, however, seizes an alien weapon and escapes.
Wikus and Christopher force themselves through MNU to the lab to retrieve the fuel. However, after seeing the brutal experiments MNU has performed on his people in the lab—including a dissected Paul—Christopher tells Wikus he must return home as fast as possible for help and cannot undo Wikus' mutation until he returns in 3 years due to the limited supply of fuel. Enraged, Wikus knocks Christopher down and attempts to fly the module to the mothership himself, but Venter's forces shoot it down. Venter captures Wikus and Christopher, but Obesandjo's gang ambushes the MNU convoy and seizes Wikus.
Meanwhile, CJ, remaining hidden in the dropship, remotely activates the mothership and a large robotic alien battle suit in Obesandjo's base. The suit guns down the Nigerians, and Wikus enters the suit and rescues Christopher from the mercenaries. Heading to the dropship, the two come under heavy fire, and Wikus decides to stay behind to fend off the mercenaries and buy time for Christopher to escape, who promises to return after 3 years and heal Wikus. After all of the other mercenaries are killed, Venter finally cripples the suit and is about to execute Wikus when slum Prawns attack and dismember him alive. Christopher makes it into the dropship with CJ, and the dropship is levitated via a tractor beam back into the mothership, which leaves Earth.
MNU's experiments are exposed, and the aliens are moved to the new camp named District 10. Tania finds a metal flower on her doorstep, giving her hope that Wikus is still alive. Wikus, now fully transformed into a Prawn, is shown in a junkyard crafting flowers for his wife.
