As the U.S. Congress gears up to implement new legislation significantly enhancing the surveillance authority of intelligence agencies, Congressman Phil Hammersley (Jason Robards) stands firmly opposed to its passage. In a bid to ensure the bill goes through, Thomas Reynolds ([Jon Voight]) from the National Security Agency takes drastic measures, eliminating Hammersley without knowing that a wildlife researcher named Daniel Zavitz ([Jason Lee]) has captured the entire incident on his video camera.
Upon discovering the murder, Zavitz takes immediate action by alerting an underground journalist, Grant Heslov, while simultaneously transferring the critical footage onto an innocuous computer disc. However, Reynolds quickly learns about Zavitz's recording and deploys a team to retrieve the video. As Zavitz attempts to evade his pursuers, he runs into an old college acquaintance, Robert Clayton Dean ([Will Smith]). In a desperate move, Zavitz discreetly slips the computer disc into Dean's shopping bag without him realizing it. Unfortunately, Zavitz meets a tragic fate when he is struck by a fire truck soon after.
However, the danger does not end there. Understanding that Dean might possess the incriminating footage, the NSA executes a raid on his home, planting surveillance devices everywhere. Unable to locate the video, they resort to framing Dean as someone who shares classified information with his former girlfriend, Rachel Banks ([Lisa Bonet]). This deceit shatters Dean's life as he faces job termination, frozen bank accounts, and his wife choosing to throw him out.
Desperate and sought after by the NSA, Dean seeks help from Banks, who arranges a meeting with a contact known as "Brill." Unfortunately, Dean's first encounter is with an agent posing as Brill, leading to his realization of the mistake. The real Edward Lyle ([Gene Hackman]), a retired NSA agent, intervenes, rescuing Dean and skillfully eliminating most of the tracking devices embedded on him. The two men join forces in their quest to evade the relentless pursuit of the NSA.
As Dean and Lyle lay low, the NSA responds by killing Banks and framing Dean for her murder. Lyle manages to piece together that the NSA orchestrated Hammersley's death but the evidence becomes compromised during a frantic escape from another NSA raid. It comes to light that Lyle possesses a deep background in NSA communications, having served in Iran before the revolution, making his motivation more personal as he once lost a partner during that tumultuous time.
Despite Lyle's urging to flee, Dean remains resolute in his intention to clear his name. In a bold move, the duo blackmails a supporter of the surveillance legislation, Congressman Sam Albert ([Stuart Wilson]), by capturing him in a compromising situation. They cleverly plant bugs left from Reynolds on Albert to instigate an investigation, alongside making a hefty transfer to Reynolds to imply bribery.
Lyle then gets a hold of Reynolds, claiming to possess the video of Hammersley's murder, and proposes a meeting. Dean informs them that the footage is currently with Mafia boss Paulie Pintero ([Tom Sizemore]), whose establishment is under FBI surveillance. This leads to a tumultuous confrontation at the restaurant, resulting in a gunfight that takes out both the mobsters and Reynolds along with several NSA agents.
In the end, Dean and Lyle manage to escape, with Lyle quickly vanishing from the radar of law enforcement. Although the FBI uncovers the conspiracy behind the surveillance bill, they choose to conceal NSA's involvement, leading to the bill's collapse. Dean is finally exonerated and can reunite with his wife, while Lyle finds solace in a tropical getaway, sending a heartfelt farewell message to Dean.
