In 2019, following a world war triggered by the sudden destruction of Tokyo on July 16, 1988, Neo-Tokyo is plagued by corruption, anti-government protests, terrorism, and gang violence. During a violent rally, the hot-headed Shōtarō Kaneda leads his vigilante bōsōzoku gang, the Capsules, against the rival Clown gang. Kaneda's 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 fellow esper Masaru, Japan Self-Defense Forces Colonel Shikishima recaptures Takashi, has Tetsuo hospitalized, and arrests the Capsules. While being interrogated by the police, Kaneda meets Kei, an activist within the resistance movement, and tricks the authorities into releasing her with his gang.
At a secret government facility, Shikishima and his head of research, Doctor Ōnishi, discover that Tetsuo possesses powerful psychic abilities similar to Akira, the esper responsible for Tokyo's 1988 destruction. Esper Kiyoko forewarns Shikishima of Neo-Tokyo's impending destruction, but the city's parliament dismisses Shikishima's concerns, leading him to consider killing Tetsuo to prevent another cataclysm. Meanwhile, Tetsuo escapes from the hospital, steals Kaneda's motorcycle, and tries to flee Neo-Tokyo with his girlfriend Kaori, but the Clowns ambush them. The Capsules rescue Tetsuo and Kaori, but Tetsuo suffers intense headaches and hallucinations and is re-hospitalized.
Overhearing their plan to rescue Tetsuo and the other espers, Kaneda joins Kei's resistance cell. At the hospital, the espers try killing Tetsuo via hallucinations, but the attempt is thwarted. A frustrated Tetsuo searches for them, killing any orderlies and militiamen blocking his path. The resistance group infiltrates the hospital, and Kiyoko draws Kei and Kaneda into Shikishima and the espers' futile attempts to stop Tetsuo. Kiyoko tells Tetsuo that Akira, located in cryonic storage beneath the Olympic Stadium's construction site, could help Tetsuo with his powers. After rejecting everyone around him, especially Kaneda, Tetsuo flees the hospital to hunt for Akira.
Using Kei as a medium to stop Tetsuo, Kiyoko breaks her and Kaneda out of military custody. Shikishima stages a coup d'état against Neo-Tokyo's government and directs its military forces to destroy Tetsuo at any cost. At the Capsules' former hangout, Harukiya Bar, Tetsuo confronts gangmates Yamagata and Kai over Kaneda's bike and kills Yamagata after his protest. Kai relays the news to Kaneda, who vows to avenge his friend, while Takashi brings Kei away. Mistaken for Akira by cultists, Tetsuo rampages through Neo-Tokyo, arriving at Akira's cryogenic storage dewar under the stadium. Kei fights Tetsuo, but he defeats her and exhumes Akira, only to find his remains sealed in jars for scientific research.
Kaneda fights 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 tries restraining Tetsuo while Shikishima unsuccessfully offers to heal his injuries and help control his abilities. Kaneda again fights Tetsuo, who, weakened from the missing arm, mutates into a gigantic mass of flesh, engulfing Kaneda and killing Kaori. The espers revive Akira to stop the growing mass. Reuniting with his friends, Akira creates a singularity, drawing Tetsuo and Kaneda into another dimension. The espers teleport Shikishima to a safe distance as the singularity destroys Neo-Tokyo in a mirror of Tokyo's previous destruction, and they agree to rescue Kaneda, knowing they will not return to this dimension as a result.
In the singularity, Kaneda experiences Tetsuo and the espers' childhoods, including his and Tetsuo's friendship and the espers' psychic training before Tokyo's destruction. The espers return Kaneda to Neo-Tokyo, informing him that Akira will take Tetsuo to safety and that Kei is developing psychic powers. Ōnishi witnesses the birth of a universe but is killed in his lab's destruction. After consuming most of Neo-Tokyo, the singularity disappears, and water floods the crater left in its place. Mourning Tetsuo's loss, Kaneda discovers that Kei and Kai have survived, and they ride off into the ruins while Shikishima watches the sunrise. At an unspecified plane of reality, Tetsuo introduces himself and triggers the creation of a universe, finally transcending the limitations of human existence.
