In Kraków during World War II, the Germans have forced local Polish Jews into the overcrowded Kraków Ghetto. Oskar Schindler, an ethnic German, arrives in the city hoping to make his fortune. A member of the Nazi Party, Schindler lavishes bribes on Wehrmacht (German armed forces) and SS officials and acquires a factory to produce enamelware. To help him run the business, Schindler enlists the aid of Itzhak Stern, a local Jewish official who has contacts with black marketeers and the Jewish business community. Stern helps Schindler arrange financing for the factory. Schindler maintains friendly relations with the Nazis and enjoys wealth and status as "Herr Direktor", and Stern handles administration. Schindler hires Jewish workers because they cost less, while Stern ensures that as many people as possible are deemed essential to the German war effort, which saves them from being transported to concentration camps or killed.
SS-Untersturmführer (second lieutenant) Amon Göth arrives in Kraków to oversee construction of Płaszów concentration camp. When the camp is completed, he orders the ghetto liquidated. Many people are shot and killed in the process of emptying the ghetto. Schindler witnesses the massacre and is profoundly affected. He particularly notices a young girl in a red coat as she hides from the Nazis, and later sees her body among a wagonload of corpses. Schindler is careful to maintain his friendship with Göth and, through bribery and lavish gifts, continues to enjoy SS support. Göth brutally mistreats his Jewish maid Helen Hirsch and randomly shoots people from the balcony of his villa, and the prisoners are in constant fear for their lives. As time passes, Schindler's focus shifts from making money to trying to save as many lives as possible. To better protect his workers, Schindler bribes Göth into allowing him to build a sub-camp.
As the Germans begin to lose the war, Göth is ordered to ship the remaining Jews at Płaszów to Auschwitz concentration camp. Schindler asks Göth to allow him to move his workers to a new munitions factory he plans to build in Brinnlitz near his home town Zwittau. Göth agrees, but charges a huge bribe. Schindler and Stern create "Schindler's List" – a list of about 850 people to be transferred to Brinnlitz and thus saved from transport to Auschwitz.
The train carrying the women and children is accidentally redirected to Auschwitz-Birkenau; Schindler bribes Rudolf Höss, the commandant of Auschwitz, with a bag of diamonds to win their release. At the new factory, Schindler forbids the SS guards from entering the factory floor and encourages the Jews to observe the Jewish Sabbath. Over the next seven months, he spends much of his fortune bribing Nazi officials and buying shell casings from other companies; due to Schindler's own machinations, the factory does not produce any usable armaments during this period. Schindler runs out of money in 1945, just as Germany surrenders, ending the war in Europe.
As a Nazi Party member and war profiteer, Schindler must flee the advancing Red Army to avoid capture. The SS guards in Schindler's factory have been ordered to kill the Jewish workforce, but Schindler persuades them not to, so that they can "return to [their] families as men, instead of murderers." He bids farewell to his workers and prepares to head west, hoping to surrender to the Americans. The workers give Schindler a signed statement attesting to his role in saving Jewish lives and present him with a ring engraved with a Talmudic quotation: "Whoever saves one life saves the world entire." Schindler is touched, but also ashamed, as he feels he should have done even more. As the Schindlerjuden wake up the next morning, a Soviet soldier arrives to announce that they have been liberated. The Jews leave the factory and walk to a nearby town.
In an epilogue, actual Schindlerjuden, accompanied by the actors who portrayed them, place stones on Schindler's grave.