Armed men hijack a New York City subway train, holding the passengers hostage in return for a ransom, and turning an ordinary day's work for dispatcher Walter Garber into a face-off with the mastermind behind the crime.

At a museum in Boston, Rugal Bernstein steals three relics: The Kagura Mirror, the Yagami Necklace and the Kusanagi Sword. He uses them to disappear into a dimensional portal to awaken the mythical entity known as the Orochi, which would grant him limitless powers. However, the sword is revealed to be a fake - thus, Rugal's quest is delayed. Mai Shiranui is told by an injured Chizuru Kagura that the whereabouts of the real sword are with Saisyu Kusanagi, who is housed at a mental institution. She is also warned that she alone must defeat Rugal and her boyfriend Iori Yagami should not be involved. At the institution, Mai meets a catatonic Saisyu and his son Kyo, but Iori's presence suddenly breaks Saisyu's catatonic state, and the elder Kusanagi threatens to kill Iori before losing consciousness and dying. Meanwhile, at another hospital where Chizuru is recovering from her injury, she is informed by her colleague Scott that Rugal has altered the King of Fighters database and issued challenges to all fighters around the world. CIA agent Terry Bogard enters Chizuru's room, demanding for information on Rugal's whereabouts and the tournament. She tells him of the different dimensions that exist, but he does not believe a word. Chizuru then tells Terry to go to Seattle and ask Mai, who is actually an undercover operative sent by the CIA to infiltrate Chizuru's organization a year ago. At a cemetery in Seattle, where Saisyu is buried, Kyo and Iori confront each other once again. Iori explains that both Kusanagi and Yagami clans were destined to be enemies. Mai hitches a ride with Kyo to his home, where she explains to him that she is looking for the Kusanagi Sword. Kyo tells her that centuries ago, according to family folklore, a Yagami ancestor attempted to release the Orochi, but it consumed him with murderous rage. Kyo's ancestor killed the Yagami and returned the Orochi into its world. Mai tells Kyo that Rugal is out to unleash the Orochi once again. Kyo, meanwhile, wants to confront Rugal, who destroyed his father's mental state. At a hotel, Mai and Kyo meet up with Iori and Terry. It is revealed that Rugal is using the tournament dimension to merge it with the real world. After Mai blows her cover in front of Kyo, Iori puts on his Bluetooth headset and enters the tournament dimension to confront Rugal. There, he defeats Rugal's servants Mature and Vice in combat, only to have his mind consumed by the Orochi. The next day, Kyo is lured into the tournament dimension, where he first fights Rugal and loses, but is allowed to live as a warning. This prompts him to bring out his ancestral sword and join Chizuru and Terry into the tournament after Mai is dragged in by Rugal. When the four meet up, they are separated into different dimensions, with Kyo fighting Rugal and Mai and Terry facing Mature and Vice. In the middle of a sword fight, Rugal is about to decapitate Kyo when Iori suddenly appears and intervenes. Here, Rugal reveals to Kyo that several years back, he battled Saisyu, Chizuru and Iori over control of the Orochi. During that fight, Iori allowed the Orochi to take over his body, defeating Rugal, but also destroying Saisyu's mental state by bashing his head against a wooden barrier several times. This leads to a fight between Kyo and Iori. Kyo slashes Iori in the back, releasing the Orochi from his body. Disappointed by the outcome of the fight, Rugal sends Kyo, Iori and Mai into another dimension to face them with his full potential. Chizuru and her multiple clones appear, revealing that she has found the mirror and the necklace. The heroes fail in their first attempt to combine the relics and trap Rugal, with Chizuru mortally wounded. Mai takes her place as the mirror holder, but as she, Kyo and Iori corner Rugal, they are once again overcome by his powers. Rugal destroys Kyo's sword, but as he is about to finish him off with a fireball, Kyo magically generates a new sword to block it. He then throws the sword and destroys Rugal. Back in the real world, Scott places a lantern on the ocean in memory of Chizuru. Kyo decides to keep the family tradition by continuing with the tournament. He reflects on his late father's teachings while Iori stares at him from the other side of the pier.

Frank Castle (Ray Stevenson), who by now has been the Punisher for five years, assaults a party for mob boss Gaitano Cesare. Billy Russoti (Dominic West) escapes to his recycling plant hideout, and Detectives Martin Soap (Dash Mihok) and Saffiotti (Tony Calabretta), who were staking out the party, inform Castle. Castle infiltrates Russoti's hideout, and after a brief firefight, Russoti is thrown into a glass-crushing machine that leaves him hideously disfigured. Russoti later refers to himself as "Jigsaw" because the stitches in his face resemble puzzle pieces. Castle, who takes cover behind the body of Nicky Donatelli (Romano Orzari), discovers that Donatelli was actually an undercover agent. Agent Paul Budiansky (Colin Salmon), the deceased agent's partner, joins the NYPD's "Punisher Task Force", partnering with Soap to help bring Castle to justice. Meanwhile, Jigsaw frees his deranged and cannibalistic brother, "Loony Bin Jim" (Doug Hutchison). Distraught over killing the agent, Castle attempts to make reparations to Donatelli's wife, Angela (Julie Benz), and daughter, Grace (Stephanie Janusauskas), to no avail. Castle threatens to retire from the vigilante business, but his armorer, Microchip (Wayne Knight), forces him to reconsider, telling him Jigsaw will go after Donatelli's family for revenge. Jigsaw, Loony Bin Jim, and two goons, Ink and Pittsy, break into Donatelli's house and hold the family hostage. The Punisher tracks down Maginty (T. J. Storm) a known associate of Jigsaw, executing him after extracting the information before being apprehended by Budiansky and Soap. Castle tells him Jigsaw went after Donatelli's family, and Budiansky sends a police car to check on the Donatelli house, intending to turn the Punisher in. When the patrol car fails to respond, Budiansky checks on the house, where he is captured by Ink and Pittsy. Soap frees the Punisher, who kills Ink and Pittsy before leading Donatelli's wife and daughter away. Budiansky then arrests Jigsaw and Loony Bin Jim after a short gun fight. Jigsaw and his brother bargain with the FBI for their release by giving up Cristu Bulat (David Vadim), who was smuggling in a biological weapon destined for Arab terrorists in Queens, New York. The brothers are granted immunity, plus the US$12 million Bulat was paying to use Jigsaw's port, and a file on Micro. They take Micro hostage, killing his mother in the process. They once again take the Donatellis hostage, after critically injuring Micro's associate Carlos, whom Castle had left to protect them. Castle later arrives at the hideout, and euthanizes Carlos. Jigsaw sets himself up in the Bradstreet Hotel, hiring a small private army of criminals. Castle enlists the help of Budiansky, who informs Cristu's father, Tiberiu Bulat (Aubert Pallascio), where Jigsaw is located. Tiberiu's goons start a shootout in the hotel lobby, affording Castle a distraction. Castle enters through a second-floor window, leading to a firefight with Jigsaw's hired guns. Afterward, Castle engages Loony Bin Jim in hand-to-hand combat; outmatched by his brute speed and agility, but eventually gets his upper hand. Realizing he will probably not survive the brawl, Jim runs away. Castle chases him and confronts both him and Jigsaw, who are holding Micro and Grace Donatelli at gunpoint. Jigsaw gives Castle a choice: If Frank shoots Micro, Jigsaw will let the others go free. Micro bravely offers his life to save the girl, but Castle chooses to shoot Loony Bin Jim instead. As a result, Jigsaw kills Micro. Enraged by the loss of his partner, Castle attacks Jigsaw, eventually impaling him with a metal rod and throwing him onto a fire. As Jigsaw burns to death, Castle calmly tells him, "This is just the beginning." Outside, Angela forgives Castle, who bids farewell to Budiansky and the Donatelli family. As Castle and Soap leave together, Soap tries to convince Castle to give up his vigilante status after having "killed every criminal in town." Soap however changes his mind when he is held up by a murderous mugger who quickly becomes another victim of the Punisher.

When Bobby Saint and Mickey Duka meet with European arms dealer Otto Krieg at the Tampa, Florida seaport, the FBI intervenes and Saint is killed while Duka is jailed. "Krieg", supposedly killed in the shootout, is actually undercover FBI agent and former U.S. Army Delta Force operator Frank Castle. Shortly thereafter, he retires from the FBI and attends a family reunion at his father's oceanside home in Aguadilla Bay, Puerto Rico. Tampa crime boss Howard Saint is enraged by the death of his son, and with right-hand man Quentin Glass bribes the FBI for confidential information about "Krieg". Saint orders Castle murdered, and Saint's wife, Livia, demands Castle's entire family be killed as well to "settle the score". At the reunion, gunmen including Glass and John Saint, Bobby's identical twin, kill most of the extended family. Castle and his father kill several of the attackers before Castle's father is killed. Castle's wife and son try to escape in a Jeep, but Saint runs over them with a truck, killing them. Castle, shot in the chest and blown off a pier in an explosion set by Glass, survives and is nursed back to health by a local fisherman, Candelaria. Once recovered, Castle goes to Tampa and takes refuge in an old tenement where three young outcasts — Dave, Bumpo and Joan — live. Castle abducts Duka, who fearfully gives up information about the Saints — whom he, too, hates, and so willingly becomes Castle's mole. Castle starts exacting revenge on the police and FBI agents who have been bribed to close the investigation of his family's murder. In the process, he sabotages Saint's money-laundering business and severs Saint's partnership with Cuban mobsters the Toro Brothers, and starts tailing Livia and Glass, whom he learns is a closeted homosexual. Saint, realizing Castle is alive, sends two assassins to kill him. Castle kills the first, guitar player Harry Heck, by shooting a ballistic knife into Heck's throat. The second is "the Russian", a behemoth who beats Castle in a brutal fight but is defeated when Castle throws boiling oil in his face, blinding him long enough for Castle to throw him down a staircase, breaking his neck. Moments later, Saint's men arrive, led by Glass and John Saint. Dave, Joan and Bumpo hide Frank and refuse to tell Glass where he is, despite Glass sadistically pulling out Dave's multiple facial piercings with a pair of pliers. They leave a man behind to kill Castle upon his return, but Castle kills him once Glass and the others are gone. With assistance from Mickey, Castle manipulates Saint into believing Glass and Livia are having an affair. Saint, unaware Glass is gay, and believing Livia to be capable of cheating on him, kills them both personally, neither of them knowing why. Castle attacks Saint's headquarters, the downtown Tampa nightclub Saints and Sinners, killing many of Saint's henchmen. He kills John Saint by having the crime boss' son hold an eight-pound, trip-wire activated grenade until his arm wearies and the grenade explodes, killing him. Castle wounds Howard Saint with a pistol when Saint attempts to shoot him in the parking lot of the nightclub. Castle then ties Saint to a slow-moving car, but not before revealing that Glass and Livia were not having an affair. Several hidden bombs go off, and the destruction and wreckage culminate in the shape of the Punisher's iconic skull. Later that night, Castle returns to his apartment and prepares to commit suicide, but after a brief vision of his wife, decides to continue his vigilante mission against others who in his mind deserve punishment. Before departing on his next mission, he leaves most of Saint's money for Bumpo, Joan and Dave. On the Sunshine Skyway Bridge, he vows, "Those who do evil to others — the killers, the rapists, psychos, sadists — will come to know me well. Frank Castle is dead. Call me the Punisher."