The setting is 1953, during the early days of television broadcast journalism. Edward R. Murrow (David Strathairn) along with his news team, producer Fred Friendly (George Clooney) and reporter Joseph Wershba (Robert Downey Jr.) learn of U.S. Air Force officer Milo Radulovich, who is being forcibly discharged because of family members being known communists and his refusal to denounce them.
Interest is piqued when it is found that the compilation of charges at Radulovich's hearing was in a sealed envelope and nobody saw them. Murrow presents the story to CBS News' director, Sig Mickelson (Jeff Daniels), who warns Murrow that the story will bring serious accusations and repercussions to CBS and their sponsors, some of whom have government contracts. He reluctantly allows the story to air, which gains positive responses from the public. Murrow also tries to ease the worries of his colleague, Don Hollenbeck (Ray Wise), who is struggling with both the strain of his recent divorce and attacks from newspaper writer Jack O'Brian, who is accusing him of being biased in his news reporting and being a "pinko".
Soon after, Wershba is given an envelope suggesting that Murrow has previously interacted with the Soviets and used to be on their payroll. CBS's Chief Executive, William Paley (Frank Langella), brings this forward to Murrow, warning him that if any members of his staff are associated with communism in any way, however remotely, they would have to recuse themselves from Murrow's next story, which is a direct attack on Senator Joseph McCarthy and his crusade against Communist infiltration in the U.S. government, which some denounce as a witch hunt. Friendly and Murrow gather their staff together, and when one of the team members voluntarily excuses himself because his ex-wife had attended Communist meetings before they even met, Murrow concludes that this kind of fear is what McCarthy wants. The team stays together and presents the story, which becomes highly praised by the public and the press, with the exception of Jack O'Brian, who continues to attack both Murrow and especially Hollenbeck on their supposed support of Communism. Hollenbeck pleads with Murrow to go after O'Brian, but Murrow reluctantly tells him that he cannot attack O'Brian while he is busy going after McCarthy.
As the team turns their focus to a filmed hearing of Annie Lee Moss, a Pentagon communication worker accused of being a communist based on her name appearing on a list seen by an FBI infiltrator of the American Communist Party, they receive the news that Milo Radulovich is being reinstated by the Air Force, citing no evidence supporting any connections with Communism. Soon after, McCarthy asks for the opportunity to speak for himself on Murrow's show, which Murrow allows. McCarthy openly accuses Murrow of being a Communist, citing several pieces of evidence that seem to support it. Murrow broadcasts a rebuttal the following week, easily disproving McCarthy's accusations and pointing out that McCarthy didn't do anything to defend himself other than accuse anyone who opposes him as being either a Communist or a Communist sympathizer.
A few days later, the news arrives that the U.S. Senate is investigating McCarthy, which means the imminent end of his crusade. As the team celebrates, Friendly and Murrow learn that Hollenbeck has committed suicide. Soon after, Paley tells Murrow and Friendly that their news program's air time is going to be severely cut, citing the high costs of the show's production, along with Murrow's attacks on controversial topics. Also, Joe Wershba and his wife Shirley, who both have been secretly hiding their marriage, due to CBS forbidding co-workers being married, are approached by Mickelson, who tells them that everyone knows of their marriage and that he will allow one of them to resign to save face, which Joe agrees to do.
The film is framed by performance of the speech given by Murrow to the Radio and Television News Directors Association at "A Salute to Edward R. Murrow" on October 25, 1958, in which he harshly admonishes his audience not to squander the potential of television to inform and educate the public, so that it does not become only "wires and lights in a box".