The extended McCallister family prepares to spend the Christmas holiday in France, gathering at Peter and Kate's (John Heard and Catherine O'Hara) home in Chicago the night before their flight. Eight year-old Kevin (Macaulay Culkin), Peter and Kate's son and the protagonist of the films, finds himself the ridicule of the other children; and after getting into a fight with his older brother Buzz (Devin Ratray) over pizza, he is sent to the third floor of the house, wishing his family would disappear. When a power failure causes the McCallisters to wake up late, they accidentally leave the sleeping Kevin behind as they hastily depart to the Chicago O'Hare International Airport, for a flight to Paris-Orly Airport. On the trans-Atlantic flight, Kate realizes that they have left Kevin behind, and once in Paris, immediately tries to book a return trip back to Chicago. Kate manages to fly into Dallas and then Scranton, but cannot get a flight back to Chicago. She manages to hitch a ride with Gus Polinski (John Candy) and his polka band who are traveling to Milwaukee.
Meanwhile Kevin, waking up to find the house empty, is elated that his wish came true and this is the part he enjoys. He gets away with taking his brother's life savings, shooting with his brother's gun, jumping on the bed, watching rubbish films, and eating all the junk food in the world. However, Kevin finds himself scared by the appearance of the Chicago Police Department, called by his parents to check on Kevin, his next door neighbor "Old Man" Marley who was rumored to have murdered his family back in 1958, and the appearance of the "Wet Bandits", Harry and Marv (Joe Pesci and Daniel Stern), who are breaking-into other houses along the block with their occupants away on holiday. On Christmas Eve, Kevin manages to overhear Harry and Marv discuss plans for breaking-into his house that night. After seeing Santa Claus and watching a local choir perform in hopes to have his family return, Kevin runs into Marley, and comes to realize that the man is quite friendly, and none of the rumors about him are true. Kevin finds Marley is estranged from his son, and suggests he reunite with him for Christmas. His spirits lifted by Marley, Kevin returns home to prepare a series of booby traps about the house. The intruders are initially fooled by Kevin's illusion that the house is occupied, but realize he is home alone, and attempt to break-in, running into the various traps. They manage to chase Kevin out of the house, who flees to the vacated, neighboring Murphy home. The Wet Bandits manage to trap Kevin but then Marley is able to subdue the two intruders, who are later arrested by the police. After thanking Marley, Kevin returns home, leaving milk and cookies out for Santa's arrival while still wishing for his parents to return home.
Kevin wakes up the next morning to find his mother has returned after she finally arrived in Chicago. Shortly afterward, the rest of the McCallisters, having traveled directly to Chicago from Paris, arrive and the extended family celebrates Christmas together, Kevin keeping silent on his encounter with the intruders. Peter finds Harry's missing gold tooth where he was hit with a paint can the night before, wondering what it is he found on the floor. Kevin discovers Marley took his advice and watches him and his son reunite. However, Buzz angrily shouts at Kevin for (accidentally) messing his room up earlier on in the film.