John McClane, a detective with the New York City Police Department, arrives in Los Angeles to attempt a Christmas reunion with his estranged wife Holly. He is taken by limousine driver Argyle to her workplace, the highrise Nakatomi Plaza. While Argyle waits in the building's parking garage, McClane joins the Nakatomi Christmas party, where he meets Holly's boss Joseph Takagi and sleazy co-woker Ellis. He finally finds Holly and they immediately get into an argument over her use of her maiden name Gennaro. Holly leaves McClane in a small room near the party.
A gang led by the suave and refined German terrorist Hans Gruber invades and secures the building, under the pretense of gaining the release of various terrorist operatives. The party-goers are subdued and it is revealed that the group are actually thieves; their plan is to use the false terrorist crisis to cover their theft of millions of dollars in bearer bonds from the building's security vault. When Takagi refuses to provide the vault combination, he is killed and Theo, the gang's technical mastermind, begins disabling the sequential vault locks, warning Gruber that the final electro-magnetic based lock will be impossible to bypass.
McClane manages to slip away during the round-up of the party-goers, albeit without his shoes. His attempt to summon help via the building's fire alarm brings him into confrontation with gang member Tony. He kills Tony, prompting the man's vengeful brother Karl to lead a hunt for the policeman through the building. McClane captures a radio and manages to convince a skeptical 911 operator to send a patrol unit, and then secures the attention of responding Los Angeles Police Department officer Al Powell by dropping the body of one of his pursuers onto the hood of the officer's car. He also takes a collection of C4 explosives and detonators off the body of another gangmember.
The LAPD responds in force, but this merely accelerates Gruber's timetable. With the police led by the incompetent Deputy Chief Dwayne Robinson, Powell quickly proves to be McClane's only useful ally outside the building. A SWAT team and an armored transport are easily and brutally repelled, to which McClane retaliates by bombing two of Gruber's men along with an entire floor of the building with some of the C4. The blast unnerves Ellis who reveals McClane's identity to Gruber with the hopes of negotiating his release. He is murdered when McClane refuses to cooperate.
An incensed Gruber orders Karl to track McClane down and recover the detonators while Gruber goes up to the roof access, where he finds himself in an unexpected face-to-face confrontation with McClane. Gruber attempts to pass himself off as a hostage; the ruse is distraction enough that Karl and his team surprise McClane in an ambush. McClane kills two more gang-members but is forced to flee, leaving behind the detonators and severely injuring his feet. As he tends his wounds, Powell tells him via radio how, in the past, he had mistakenly shot a child "armed" with a toy gun. His grief had him heading for a career as a desk officer.
Outside, the spectacle attracts massive media attention, while the FBI arrives on the scene in the form of two swaggering agents. The duo order the building's power be cut, which serves only to deactivate the final lock on the building's vault, just as Gruber had planned. He "negotiates" with the FBI to release the hostages on the rooftop via helicopter transport. The agents plan on double crossing the "terrorists" with a surprise attack using gunships (with little regard to the hostages' welfare), while Gruber in fact is planning his own treachery; using the C4 to destroy the entire upper structure of the building, killing all the hostages and covering the gang's escape.
McClane investigates the roof access, wondering about Gruber's ealier presence in that area. He discovers the primed C4 and tries to alert Powell, only to be cut off by an attacking Karl. After a vicious battle, McClane leaves Karl hanging from a heavy chain. Back outside the building, an irresponsible TV reporter named Richard Thornburg accidentally alerts Gruber to the fact that Holly is McClane's wife. He takes her aside as a special hostage as his remaining men raid the vault and Theo goes to the parking garage to prepare the gang's getaway ambulance. Argyle, who has kept up with events via his limo's radio, rams the vehicle with his limousine and punches Theo unconscious.
McClane storms the roof, driving the hostages back down to safety with warning gunfire. The FBI mistake McClane for a terrorist and fire at him, while Gruber proceeds with the detonation of the C4. McClane escapes the blast by tying a fire hose around his waist, jumping over the side of the building, and shooting his way in through a window a couple of stories down. The gunship crew, including both FBI agents, are killed.
A battered McClane confronts Gruber one last time high up in the tower, with Holly being held at gunpoint. McClane tricks Gruber with a faked surrender and shoots the villain, who falls from the building to his death. As McClane and his wife leave the building, the seemingly-indestructible Karl reappears one last time, only to be gunned down by Powell. Holly and John are approached by Thornburg, still relentlessly angling for a fresh scoop. Holly punches the reporter and the couple departs the scene in Argyle's battered limo.
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