The film unfolds in a dystopian near-future that is set in a nameless authoritarian European nation during the Christmas season. In this bleak reality, terrorist bombings are a common occurrence, and the government's campaign against these so-called enemies of the state has raged on for decades. The story begins in a government office where a man swats a fly that inadvertently causes a mix-up in an official document, changing the name from "Tuttle" to "Buttle."
In the Buttle household, the family is joyously trimming their Christmas tree when their tranquility is shattered. Armed policemen abruptly invade their home, creating chaos as they breach the floor above and drop into the Buttle's living space. Amidst the confusion, Mr. Buttle is taken away in a canvas bag after his wife is coerced into signing several forms.
Meanwhile, we meet Sam Lowry (Jonathan Pryce), a low-level employee of the Ministry of Information (MOI), who often drifts into daydreams, envisioning himself as a heroic winged warrior rescuing a beautiful maiden. When Sam is assigned the task of correcting the shocking error of Mr. Buttle's wrongful arrest, he encounters unexpected repercussions. His boss, Mr. Kurtzmann (Ian Holm), is frustrated by the appearance of a compensation check meant for Mrs. Buttle. Sam, determined to deliver the check directly, finds Mrs. Buttle in a state of shock, consumed by worry over her husband's fate.
In a twist of fate, Sam discovers that Jill Layton (Kim Greist), the upstairs neighbor of the Buttles, is the very woman who haunts his daydreams. Jill is also embroiled in the bureaucratic nightmare of searching for answers about Mr. Buttle, and unbeknownst to her, she is now viewed as a potential terrorist due to her connections with Harry Tuttle (Robert De Niro), a rogue air conditioning specialist who operates outside the confines of bureaucracy.
One fateful night, Sam unexpectedly crosses paths with Tuttle, who has intercepted a call concerning Sam's malfunctioning climate control system. Tuttle, cautious and somewhat flamboyant, speaks of his disdain for the government's oppressive control and offers to assist Sam while simultaneously evading capture from government officials Spoor and Dowser (Bob Hoskins and Derrick O'Connor). After a series of clever maneuvers to help Tuttle evade detection, Tuttle leaves with a memorable quip: > “Remember Kid, we’re all in this together!”
Determined to connect with Jill, Sam decides to accept a promotion to the "Information Retrieval" department to access her records, hoping to learn more about her situation. With the help of his mother, Ida (Katherine Helmond), who is obsessed with maintaining her youthful appearance, he navigates through the murky waters of bureaucratic connections. His promotion, which he previously declined, becomes a means to dig deeper into the MOI's corrupt dealings.
As the tension escalates, Sam navigates through an office that feels more like a prison than a workplace, and after obtaining Jill's files, he sets out to find her, racing against time and danger. The exhilarating twists and turns lead Sam to moments of desperation, turning his world upside down as he confronts the tenuous relationships he holds with Jill and the oppressive bureaucracy that threatens their very existence.
After a sequence of explosive incidents, including a misunderstanding that leads Sam to believe Jill may be implicated in a bombing, he finds himself caught between his aspirations and the oppressive realities of the world around him. Eventually, the stakes rise when Sam is labeled as part of a conspiracy, thrusting him into a chilling confrontation with the government that seeks to subdue any form of dissent.
In a climactic clash, Sam is captured and brutally tortured, revealing the complex entanglements of friendship and betrayal against a backdrop of relentless governmental power. Just when hope seems lost, Tuttle and the resistance members intervene, leading to an explosive escape that results in chaos and destruction.
The film culminates in a surreal sequence as reality crumbles around Sam, manifesting in nightmarish visions of his mother and former acquaintances meshing into a strange tapestry of fate and control. Ultimately, Sam's journey leads to a perceived idyllic escape with Jill, only to be unmasked as an illusion.
In a haunting revelation, we discover that Sam's perceived happiness is merely a figment of his imagination, existing within a catatonic state while being manipulated by those who wish to extinguish his spirit and dreams. As the scene fades to black, Sam is left in silence, a bittersweet reminder of the all-consuming grip of bureaucracy on the individual.
