Alec Leamas, a former SOE operative during World War II who fought in the Nazi-occupied Netherlands and Norway,[5] is recalled from his posting as Station Head of Berlin Station, West Berlin's operational branch of the Circus, and returns to London in despair after watching the death of his final undercover operative, Karl Riemeck, a member of the praesidium in East Germany's Socialist Unity Party, at the hands of Hans-Dieter Mundt. Mundt, formerly a lower level intelligence operative who is known to the Circus for his involvement in the murder of Foreign Office official Samuel Fennan a few years earlier, has risen to become the head of the East German Abteilung on account of his brilliant counter-intelligence aptitude, a skill demonstrated with his liquidation of Leamas' entire network. Finding himself with no operatives left, Leamas visits Circus chief Control and expresses a desire to get out of the intelligence community and "come in from the cold". Control asks him to instead stay "in the cold" for one last mission: defect to East Germany and frame Mundt as a double agent for SIS. Mundt's deputy, Jens Fiedler, Control explains, is beginning to believe that Mundt may be a turncoat, and could be a useful target for Leamas in this endeavour. In exchange for this, Leamas will keep anything he makes on the mission, in addition to a pension pot, and will be granted leave to retire from the service.
In order to convince the East Germans' of Leamas' potential defection, the Circus demotes Leamas to the finance department, where he starts to exhibit signs of alcoholism. He eventually is sacked abruptly on rumours he was stealing money from the Circus' accounts to support the small pension he was granted by his superiors, and is forced to go on the dole. Eventually he takes a job in a small run-down library, whilst living in a low quality flat. Whilst there, he meets Liz Gold, the secretary of her local Communist Party of Great Britain branch, and the two gradually strike up a friendship, and eventually become lovers. After a period of illness reveals the extent of Liz's feelings for him, Leamas confides in her that a day is coming where he will say goodbye and she must not look for him. A few days later, he says goodbye, and takes the "final plunge" into Control's plan, getting arrested for assault and sentenced to three months in prison. Before fully involving himself in the scheme, he makes Control promise to leave Liz alone and out of the remit of the Circus.
Upon his release, Leamas is approached by an East German recruiter who claims to know him from his time in Berlin. He lets him stay at his home, and introduces him to a contact who takes him across to the Netherlands on a faked passport. Whilst there, an intelligence agent from the East interviews him deeply on his past in the Circus at a safe house in the Netherlands, before then taking him across into East Germany and gradually meeting more senior officials of the Abteilung, all the while dropping occasional hints about payments to a potential double agent. Whilst this occurs, Liz is suddenly visited by the retired Circus agent George Smiley, who tells her to come to him should she need anything, enquires about her relationship with Leamas, and pays off the outstanding rent on Leamas' flat.
Now in East Germany, Leamas is finally introduced to Fiedler, where he is held under guard in a sparsely decorated home in the middle of nowhere. His days consist largely of extended discussion about his past Circus work, combined with walking in the local countryside and hills with Fiedler or a guard. The two men often end up in philosophical debate, particularly on the topic of Leamas' more pragmatic view of life in comparison to Fiedler's idealist ideological views about life in East Germany. These conversations reveal what Leamas observes as a fear about both the righteousness of Fiedler's motivations, as well as the morality of what he does for his country. In contrast, Mundt is a brutal opportunist, also mercenary-like in manner, who left the Nazis after the war out of convenience and joined the Communists. Fiedler also notes his suspicions about Mundt as the men get closer, and Fiedler conveys his fears about Mundt's anti-semitism affecting him, a Jewish man.
Towards the end of Leamas' tenure in interrogation with Fiedler, the extent of the power struggle in the Abteilung is exposed when Mundt abruptly arrests Fiedler and Leamas. In the panic Leamas inadvertently kills an East German guard, and awakes in Mundt's facility, where Mundt interrogates and tortures both men. It is then revealed, however, that Fiedler had also submitted an arrest warrant for Mundt, leading the East German régime to intervene and convene a court. Fiedler and Mundt are both released, and then summoned to present their cases to a tribunal convened in camera. During the trial, Leamas further elaborates on previous mentions of undercover payments to a foreign agent in bank accounts which match locations that Mundt had travelled to, whilst Fiedler presents other evidence implicating Mundt to be a British agent.
Whilst Leamas is away, Liz receives an invitation from the East Germans to participate in an exchange of party members with the British Communist Party. Surprisingly, she is summoned by Mundt's attorney as a witness and forced to testify at the tribunal. She then admits Smiley paid the apartment lease, and that Smiley offered help should she need it. She also confesses that Leamas made her promise not to look for him, and that he said goodbye immediately before he assaulted the grocer. Leamas, realising his cover has been blown, offers to tell them about the mission in exchange for Liz's freedom, but realises the true nature of the scheme during the course of the tribunal. Fiedler is then arrested at the tribunal's end.
Immediately after the trial, Mundt subtly locates and then releases Leamas and Liz from jail, and gives them a car to get from their current location to the Berlin Wall. During the drive, Leamas explains the entire situation to a bemused Liz. Mundt is actually a British double agent, who reports to Smiley, who is actually undercover in the mission and pretending to be retired. Mundt was turned against the East Germans before he returned following the murder of Samuel Fennan a few years earlier, and the mission's true target was Fiedler, who was closing on exposing Mundt as a double agent. On account of Leamas and Liz's intimate relationship, however, Mundt (and Smiley) were provided with the means of discrediting Leamas' ability to provide evidence to the tribunal, and as such discredit Fiedler. Liz, however, is shaken, and realises that to her horror, her actions have enabled the Circus to protect their asset Mundt at the expense of the thoughtful and idealistic Fiedler. When asked what will become of Fiedler, Leamas replies that he will be shot.
Although disgusted, Liz overcomes this on account of her love for Leamas. The two drive to the Berlin wall, and make a break for West Germany by ascending over the wall and through a section of sabotaged barbed wire atop the wall. Leamas reaches the top, but as he reaches down to help Liz, she is shot and killed by one of Mundt's operatives. She falls back down, and as Smiley calls to Leamas from the other side of the wall, he hesitates, before eventually descending the wall on the East German side to die.
