Adam (Leigh Whannell), a photographer, awakens in a water-filled tub and finds himself in a disused bathroom along with Dr. Lawrence Gordon (Cary Elwes), an oncologist. Both men are chained at the ankle to the pipes at opposite ends of the room. Lying between them is a corpse in a small pool of blood holding a revolver and a microcassette recorder. Adam and Lawrence learn from tapes in their pockets that Adam must escape the bathroom, while Lawrence must kill Adam before six o’clock, or he will lose his wife and daughter and be left to die. Lawrence’s tape also implies that the corpse between them was a similar victim who shot himself before succumbing to the effects of a poison. They find a bag containing two hacksaws, though neither is able to cut through the chains. Lawrence realizes that the saws are meant to be used on their feet.
Flashbacks show that while Lawrence was talking with some students and an orderly named Zep Hindle(Michael Emerson) about the terminal brain cancer of a man named John (Tobin Bell), he was approached by Detectives David Tapp (Danny Glover) and Steven Sing (Ken Leung) about his penlight being found at the scene of a Jigsaw “game”. He viewed the testimony of Amanda (Shawnee Smith), a heroin addict, who is the only known survivor of Jigsaw’s games that believes that her experience made her a better person. Other victims of Jigsaw’s games included Paul (Mike Butters), who was trapped in a cage filled with razor wire, and Mark (Paul Gutrecht), who was trapped in a room with a flammable substance all over his body along with a candle to help him read the walls covered with numbers that hid the combination to a safe.
Meanwhile, Lawrence’s wife and daughter, Alison (Monica Potter) and Diana (Makenzie Vega), are being held captive in their home by Zep who is also watching Adam and Lawrence through a camera behind the bathroom’s mirror. Their house is simultaneously being watched by Tapp, who was discharged from the force after becoming obsessed with the Jigsaw case when he and Sing tried to save Jeff from being killed by Jigsaw. Jigsaw managed to make a run for it after slashing Tapp’s throat, and Sing was killed by a shotgun booby trap while pursuing him. After being discharged, Tapp began stalking Lawrence. Back in the bathroom, Lawrence finds a mobile phone that can receive calls but not send them. Back at Lawrence’s house Zep moves to kill Alison, but she frees herself and manages to overpower Zep while calling Lawrence again. Zep’s shooting gained Tapp’s attention in the process. He arrives in time to save Alison and Diana from Zep, allowing them to escape. Zep then flees to the sewers with Tapp in pursuit.
Lawrence, who is only aware of gunshots and screaming on the phone, is zapped by the ankle chain as well and loses reach of the phone; in desperation, he saws off his foot and shoots Adam with the corpse’s revolver in the shoulder. Zep, who shot Tapp during the chase, enters the bathroom intent on killing Lawrence, only to be blindsided by Adam and beaten to death. As Lawrence crawls away with the promise that he will return with help, Adam searches Zep’s body for a key and finds yet another microcassette recorder. As he plays the tape he learns that Zep was only following rules to obtain an antidote for the slow-acting poison within his body; the corpse in the middle of the room is revealed to be the terminal brain cancer patient John when he rises to his feet and reveals himself as the real Jigsaw Killer. Adam grabs Zep’s pistol and tries to shoot John but is electrically shocked by his hidden remote control before he can do so. John then turns off the lights and seals the door to the bathroom, leaving a terrified Adam to die.