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."