A yellow cab emerges from the Stygian fog of a New York City evening. Inside, the driver, Travis Bickle, remains alert for passengers. A quick flashback reveals some information about Bickle’s background: he is 26 years old, was honorably discharged from the Marines in 1973 at the peak of the Vietnam War, and he suffers from severe insomnia. Because he cannot sleep, he rides around the city at night, and if he's going to do that, he might as well get paid for it.
Travis keeps a journal, parts of which is narrated in voice-over throughout the film. The journal paints Travis as a lonely man, who feels isolated and alienated by the big city. He laments the dirty streets of New York, bemoaning the predominance of criminals and addicts, and referring derogatorily to minorities such as homosexuals and black people. When he isn’t driving or writing, Travis goes to seedy theaters to watch porno flicks. Sometimes he hangs out with a few other cabbies at a 24 hour diner, one of whom—Wizard—dispenses a steady mix of anecdote and philosophy. Travis is markedly uncomfortable around other people, and especially fidgety around black men. On one visit to the porno theater, he tries and fails to establish a romantic connection with a black woman operating concessions.
It is election season and Senator Palantine is running for office. Inside his campaign headquarters, we meet Betsy, a beautiful young staffer with whom Travis becomes obsessed. He parks outside campaign headquarters just to stare at her, and observes fellow staffer Tom making daily overtures to Betsy using dry humor and ironic self-awareness, traits which infuriate Travis. When Betsy takes notice of the stalker-ish cabbie, she gets Tom to check him out, but as he approaches, Travis drives off.
Shortly thereafter, Travis has worked up the nerve to walk into the campaign offices and approach her. He asks her out for coffee, and while Betsy hesitates at first, she is intrigued by his boldness, and agrees. Their date, while uncomfortable, seems to draw them closer together, each of them puzzling over one another with curiosity. When Travis asks her to go out to a movie with him, Betsy hesitantly agrees.
Purely by coincidence, Travis picks up Senator Palantine in his cab. Gloating that he is the candidate’s biggest supporter, Travis struggles to name why specifically, and instead resorts to a passionately conservative rhetoric, which focuses on taking action to “clean up” the city of its scum and vagrants.
That same night, a child prostitute gets into Travis's cab begging him to speed away. Her name is Iris and just as Travis is about to take off, a man reaches in, grabs her and pulls her out. The man urges Travis to forget about the incident and tosses him a $20 bill.
On their date, Betsy balks when Travis takes her to a seedy Times Square porno theater to see an X-rated skin flick. Not knowing any better, Travis insists that the film is popular with couples and they go in. After a few minutes of the pornographic film, however, Betsy runs off, disturbed and offended. Travis calls and sends flowers to the campaign office, but cannot get in touch with her. Finally, he angrily enters the campaign headquarters and confronts Betsy, attacking her character and yelling belligerently, before he is forced from the premises.
As Travis becomes more alienated from the world around him, he illegally purchases a number of guns from an underground dealer, practicing at shooting ranges, rehearsing quick draws in front of the mirror, and staring numbly at the television. In the face of Betsy's rejection, he develops a seemingly harmless but unusual obsession with Senator Palantine.
One night while Travis is shopping at a convenience store, a young black thief tries to hold up the store. Travis shoots the thief and the owner tells Travis to leave before the police arrive; as a result he faces no legal consequences for the murder of the thief. After searching for her, Travis finds Iris, the child prostitute, and the brothel where she works, and Travis learns that the man who pulled her out of the cab earlier is her pimp, a man named Matthew, and called "Sport" by his prostitutes. After an awkward meeting with Sport, Travis pays for fifteen minutes with Iris. Iris treats Travis like any other john, attempting to initiate sex, but he rejects her come-ons with revulsion. He reveals that he sees himself as her white knight, arriving to save her from prostitution, and they agree to meet the next day for breakfast to talk. Over breakfast, Iris admits to dreaming of escape, and going to live in a commune in Vermont, but she ultimately rejects Travis's offers to help, thinking he’s just weird.
Travis shows up at a campaign rally for Senator Palantine now sporting a mohawk. He moves closer to the stage as Palantine is speaking and reaches for his gun, but his appearance has already drawn the attention of the Secret Service and though they give chase, he manages to slip away. His assassination attempt having failed, he sets his designs on saving Iris. Travis goes to the brothel fully armed and loaded. In a violent and gory shootout, Travis manages to kill Sport, the owner of the room where Iris brings her customers, and one of those customers. Travis is also shot twice, once in the neck and once in the arm. The police arrive and Travis points his own bloody finger at his half-shaven head in a gesture simulating suicide, while Iris cries on the floor next to the couch.
A few months later, Travis is back on his cab route, and we see evidence of his glory in the public eye, and hear, in voiceover, the enthusiastic thankfulness of Iris's father, after being reunited with his daughter. Newspaper headlines reveal that the violent shootout has transformed Travis in a national hero, and he has awakened from the coma that left him hospitalized in the wake of the shootout.
As the film concludes, Travis picks up a now admiring Betsy in his cab. As Betsy asks him about his heroic act, Travis stares at her reflection, never turning to face her. He drops her off without charging her a fare, and drives off into the night.