Atlas Shrugged is set in a dystopian United States at an unspecified time, in which the country has a "National Legislature" instead of Congress and a "Head of State" instead of a President. The government has increasingly extended its control over businesses with increasingly stringent regulations. The United States also appears to be approaching an economic collapse, with widespread shortages, constant business failures, and severely decreased productivity. Writer Edward Younkins said, "The story may be simultaneously described as anachronistic and timeless. The pattern of industrial organization appears to be that of the late 1800s—the mood seems to be close to that of the depression-era 1930s. Both the social customs and the level of technology remind one of the 1950s". Many early 20th-century technologies are available, and the steel and railroad industries are especially significant; jet planes are described as a relatively new technology, and television is significantly less influential than radio. Although other countries are mentioned in passing, the Soviet Union, World War II, or the Cold War are not. The countries of the world are implied to be organized along vaguely Marxist lines, with references to "People's States" in Europe and South America. Characters also refer to nationalization of businesses in these "People's States", as well as in America. The economy of the book's present is contrasted with the capitalism of 19th century America, recalled as a lost Golden Age.
As the novel opens, protagonist Dagny Taggart, the Operating Vice President of Taggart Transcontinental, a railroad company established by her grandfather, attempts to keep the company alive against collectivism and statism amid a sustained economic depression. While economic conditions worsen and government agencies enforce their control on successful businesses, the citizens are often heard repeating the cryptic phrase "Who is John Galt?", in response to questions to which the individual has no answer. It sarcastically means: "Don't ask important questions, because we don't have answers"; or more broadly, "What's the point?" or "Why bother?". Her brother, James Taggart, the railroad's president, is peripherally aware of the company's troubles, but seems to make irrational decisions, such as preferring to buy steel from Orren Boyle's Associated Steel, rather than Hank Rearden's Rearden Steel, despite the former continually delaying delivery of vital rail while the latter delivers on schedule. In this as in other decisions, Dagny simply continues her own policy amid others. She is nevertheless disappointed to discover that the Argentine billionaire Francisco d'Anconia, her childhood friend and first love, appears to be destroying his family's international copper company without cause by constructing the San Sebastián copper mines, despite the fact that Mexico is under a Communist government that is planning to nationalize the mines. She soon realizes that d'Anconia is actually taking advantage of the investors by building worthless mines. Despite the risk, Jim and his allies at Associated Steel invest a large amount of capital into building a railway in the region while ignoring the more crucial Rio Norte Line in Colorado, which has been threatened by the rival Phoenix-Durango Railroad after the former began transporting supplies for Ellis Wyatt, who has revitalized the region after discovering large oil reserves. Dagny minimizes losses on the San Sebastian Line by pulling obsolete trains on the line, which Jim is forced to take credit for after the line is nationalized as Dagny predicted. Meanwhile, in response to the success of Phoenix-Durango, the National Alliance of Railroads, a group containing the railroad companies of the United States, passes the "anti-dog-eat-dog" rule prohibiting competition in economically-prosperous areas while forcing other railroads to extend rail service to "blighted" areas of the country, with seniority going to more established railroads. The ruling effectively ruins Phoenix-Durango, upsetting Dagny. Wyatt subsequently arrives in Dagny's office and presents her with a 9-month ultimatum: if she does not supply adequate rail service to his wells by the time the ruling takes place and rail service would be temporarily suspended, he will not use her service, effectively ensuring financial failure for Taggart Transcontinental.
In Philadelphia, Hank Rearden, a self-made steel magnate, has developed an alloy called Rearden Metal, which is simultaneously lighter and stronger than conventional steel. Rearden keeps its composition secret, sparking jealousy among competitors. Dagny opts to use Rearden Metal in the Rio Norte Line, becoming the first major customer to purchase the product. As a result, pressure is put on Dagny to use conventional steel, but she refuses. Hank's career is hindered by his feelings of obligation to his wife, mother, and younger brother. After Hank refuses to sell the metal to the State Science Institute, a government research foundation run by Dr. Robert Stadler, the Institute publishes a report condemning the metal without actually identifying problems with it. As a result, many significant organizations boycott the line. Although Stadler agrees with Dagny's complaints over the unscientific tone of the report, he refuses to override it. Dagny also becomes acquainted with Wesley Mouch, a Washington lobbyist initially working for Rearden, whom he betrays, and later notices the nation's most capable business leaders abruptly disappearing, leaving their industries to failure. The most recent of these is Ellis Wyatt, the sole founder and supervisor of Wyatt Oil, who leaves his most successful oil well spewing petroleum and fire into the air (later named "Wyatt's Torch"). Each of these men remains absent despite a thorough search by politicians.
Having demonstrated the reliability of Rearden Metal in a railroad line named after John Galt, Hank Rearden and Dagny Taggart become lovers, and later discover, among the ruins of an abandoned factory, an incomplete motor that transforms atmospheric static electricity into kinetic energy, of which they seek the inventor. Eventually, this search reveals the reason of business leaders' disappearances: Dagny pursues a scientist to Galt's Gulch, where John Galt is leading an organized strike of business leaders against a society that demands that they be sacrificed.
Reluctant to abandon her railroad, Dagny leaves Galt's Gulch. But Galt follows her to New York City, where he hacks into a national radio broadcast to deliver a long speech (70 pages in the first edition) to explain the novel's theme and Rand's Objectivism. As the government collapses, the authorities capture Galt, but he is rescued by his partisans, while New York City loses its electricity. The novel closes as Galt announces that they will later reorganize the world.