In the year 2038, Britain has become a totalitarian republic, ruled by the Norsefire party. About 20 years previously, many world governments were on the brink of collapse due to the War on Terror spiraling out of control. Little is mentioned of foreign countries, but the outside world is implied to be in chaos, with the "former United States" dissolving in an ongoing civil war. Britain was able to survive the crises by embracing a fascist government with large emergency powers, which managed to save Britain from total collapse and restore order. However, for the past decade or so the immediate danger has subsided, but Norsefire maintains a totalitarian grip on power. Norsefire also uses state-controlled mass media as a propaganda tool to support the government.
Evey Hammond, a young woman, is rescued from sexual assault by state police by a masked vigilante who introduces himself as "V". V then takes Evey to a rooftop location to witness his spectacular destruction of the Old Bailey, accompanied by Tchaikovsky's 1812 Overture. The regime explains the incident to the public as a planned demolition, but this is shown to be a lie when V takes over the state-run British Television Network (BTN) the same day. He broadcasts a message decrying the evils of the fascist regime, but also scolds the common everyday citizenry for allowing them to come to power in the first place. V urges the people of Britain to rise up against the oppressive government on November 5 (Guy Fawkes Night); one year from that day, when V says he will destroy the Houses of Parliament.
Evey, who works at the BTN, helps V escape, but in doing so, puts herself in danger. V saves Evey by bringing her to his lair, where she is told that she must stay in hiding with him for a year. She reluctantly stays for some time, but upon learning that V is killing government officials, she escapes to the home of one of her superiors, Gordon Deitrich, who is also a good friend (and, unlike in the comic, a homosexual who has hidden his true nature for fear of being arrested). However, the state police raid Gordon's home shortly afterwards in response to Gordon satirizing the High Chancellor in his talk show. Evey is captured as she tries to escape. She is incarcerated and tortured for days, including having her head shaved, finding solace only in notes left by another prisoner, Valerie. Evey is eventually told that she will be executed unless she reveals V's whereabouts. An exhausted Evey says she would rather die, and, surprisingly, is then released. V then reveals himself to have been her captor. Though at first angry against him for this torture, Evey comes to realize that having faced her own death, she can now live without fear. She leaves V, promising to return before November 5.
Meanwhile, Chief Inspector Finch, while investigating V's activities, learns how Norsefire came to power, and about V’s origins. Twenty years previously, Britain had suffered from war and terrorism due to their assistance in the War on Terror, which was spiraling out of control. The socially-conservative and openly fascist Norsefire party led a reactionary purge to restore order; so-called enemies of the state (foreigners, Muslims, homosexuals, liberals, and common war protesters) disappeared during the night, rounded up in massive prison camps where they ultimately died. The country was deeply divided over these events until a bioterrorist attack occurred, killing about 100,000 people (80,000 to be exact according to an article Finch is seen reading on his office computer). A pharmaceutical company owned by Norsefire soon discovered a cure to the virus, netting them vast wealth from its distribution. The fear generated by the attack allowed Norsefire to silence all opposition and win the next election by a landslide. With the silent consent of the people, Norsefire turned Britain into a bigoted totalitarian police state, with their leader Adam Sutler as High Chancellor.
However, the attack had actually been engineered by Norsefire as a plot to gain power. The virus - along with its cure - had been engineered through human experimentation on "social deviants" and political dissidents at Larkhill detention centre. Among them was the man who would become V. Although all the other test subjects died from the experiments, he gained heightened mental and physical abilities at the cost of significant physical disfigurement and warping his mind. These abilities enabled V to destroy the centre and escape, vowing to take revenge on Norsefire's regime.
From this revelation, the inspector predicts the chain of coming events. Narrated by him, he explains the brilliance of V's plan. His manipulation, hidden agenda, and finally the shipping out of hundreds of thousands of Guy Fawkes masks and cloaks to homes throughout Britain. The sheer number of these masks means anyone wearing one is effectively unidentifiable despite constant video surveillance, enabling people to act anonymously for the first time since Norsefire came to power. One man wears his mask while committing a crime, robbing a store and yelling "Anarchy in the U.K" as he departs; a reference to the Sex Pistols song as well as to the V of the comic book who thought himself more of an anarchist than a freedom fighter. Finch explains that "with so much chaos, someone will do something stupid": a young girl wears her mask while committing peaceful protest, spray-painting V's symbol over suitable targets such as Norsefire posters, and is eventually shot by one of the secret police. The shooter is then lynched by angry citizens regardless of his badge and gun. As Finch explains, this will provoke Sutler to do "the only thing he knows how to do": clamp down even further on the population by mobilizing more soldiers to police the cities and increase martial law, which really only serves as a catalyst for further rebellion because it will agitate the population even more. Finch ruefully surmises that public resentment against Norsefire will then be brought to the breaking point, "at which point, all V needs to do is keep his word" and destroy Parliament on November 5.
V then provokes high-level Party official Creedy, head of the secret police, into making a Faustian pact with himself. V couldn't get to Sutler due to tight security, but he could get to his right-hand man Creedy. As V accurately surmises, for years Sutler has known that if ever there was a popular uprising against Norsefire (however unlikely), he would be killed. So all of this time, Sutler's escape plan has been to use his lieutenant Creedy as his fall-man: he will blame all of the excesses and brutality of Norsefire on Creedy and claim that he was just Creedy's puppet. Creedy, however, is also no fool and his backup plan has been to turn on Sutler if Norsefire gets overthrown. V tricks the regular police under Finch into putting Creedy under surveillance and tapping his phones, then manipulates Creedy by pointing out the wiretaps but telling him they were set by Sutler, who he says is panicking and about to use Creedy as a scape goat. V makes a deal with Creedy whereby on November 5th, V will surrender himself to Creedy, on the condition that Creedy hands over Sutler to V first.
As November the fifth nears, V's various schemes cause chaos in Britain and the population grows more and more intolerant of and subversive towards government authority. On the eve of November 5, Evey again visits V, who shows her a subway train that he has filled with explosives in order to destroy Parliament through an explosion in the abandoned London Underground. He delegates the destruction of Parliament to Evey, believing that the ultimate decision was not his to make, but hers. He then leaves to meet Creedy, who has brought Chancellor Sutler, in the Victoria underground station. Creedy kills the Chancellor in front of V, but V does not surrender. He takes a barrage of bullets from a dozen men, and remains standing thanks to a hidden armour plate he is wearing and his super human strength gained from the experiment. He then proceeds to kill Creedy's men before they can reload, then strangles Creedy himself despite being shot six more times - just as he promised. V, mortally wounded in the fight, returns to Evey. He confesses his love to her, thanks her, and then dies. Evey then places his body upon the train with the explosives (in the graphic novel he asked on his deathbed to be placed in the train, as he wanted a Viking funeral, but no mention of this request is made in the film).
Evey is about to send the train down the track, when she is discovered by Inspector Finch. However, Finch, having learned much about the corruption of the Norsefire regime, allows Evey to proceed. Meanwhile, thousands of Londoners, all wearing Guy Fawkes masks, march on Parliament to watch the event. Because Creedy and the Chancellor are dead, the military stands down in the face of a civil rebellion. Parliament is destroyed by the explosion. On a nearby rooftop Evey and Finch watch the scene together, and Finch asks who V was. Evey answers by saying that he is all the people of Britain (The camera shows the crowd again as they remove their Guy Fawkes masks and reveal characters from the film, including deceased characters such as the young girl, Gordon, Valerie and her girlfriend Ruth).
