October 1985: masked super heroes have been outlawed since the Keene act in 1977 after a series of riots in which the public asked for police to watch the streets instead of superhero vigilantes. Recently the Comedian, one of the few masked heroes still in operation (as a government worker) was murdered when he was thrown from his apartment window. Rorshach, the one here who has refused to give up the game due to his overwhelming since of justice, travels around to all his former associates, warning him of a conspiracy to rid the world of masked heroes.

Shortly after Dr. Manhattan is driven from Earth after he has a fight with his girlfriend Laurie and he is accused of giving all his former associates cancer. Dr. Manhattan (Jon) is interesting because he is one of the few heroes with actual super powers. Basically, he can control existence at the atomic level after he was inadvertently vaporized in a nuclear reactor. Next, there is an assassination attempt against Veidt (Ozymandias), the smartest man in the world, successful businessman, and hero. Simultaneously, it appears world war III begins as Russia invades Eastern Europe.

Rorshach is captured by the police during his investigation of the attacks on the masked heroes, but he is soon broken out of prison by Nite Owl (Daniel Dreiberg) and Silk Spectre (Laurie) who have taken up their mantle of heroes again as well as having started a relationship. As it becomes clear that a nuclear holocaust is imminent, Laurie is brought to Mars (by Dr. Manhattan) to convince him that he must save the world. Though he has lost connection with humanity, she convinces him (or perhaps he convinces himself) that the improbable fact of human existence makes it worth protecting.

Meanwhile Rorshach and Nite Owl travel to the North Pole to confront Ozymandias, whom they realize is behind all the recent events. They arrive too late, and Veidt reveals his plan to unite the world by creating an alien creature that he will teleport to New York city at which point it will explode, killing half the city. Seeing this threat, the world unites, Russia stops their war and nuclear holocaust is prevented. Nite Owl, Laurie, and Dr. Manhattan all agree that, as despicable as what Veidt did was, it actually worked and revealing the truth would cause more harm than good. Rorshach refuses to join in on the lie, but before he is free to spread the truth, he is killed by Dr. Manhattan (though no one else is aware of this). In the end, we are left with an image of the New Frontiersmen (a right wing news paper) finding the journal that Rorshach sent them just before traveling to the North Pole, in which he reveals that Adrian Veidt is responsible for the conspiracy.