Police Officer III Jack Traven and his partner Police Officer III Harry Temple, a veteran with over ten years on the force, are explosives experts in LAPD SWAT. A disgruntled retired Atlanta bomb squad sergeant, Howard Payne, is holding a group of thirteen office workers trapped in an express elevator for ransom. Charges have already taken out the cables, and Payne wants $5 million or he will blow the emergency brakes. Jack and Harry manage to rescue the hostages before Payne sends the elevator plummeting to the basement. They find Payne in a freight elevator. Payne manages to hold Harry hostage, but after a brief standoff, Jack follows
Harry's insistent urging to "shoot the hostage" to take him out of the equation.
Payne escapes and sets off a small explosion in the parking garage that knocks Jack unconscious and appears to kill Payne. Jack and Harry are then commended for their bravery by the LAPD in an official ceremony. Now with a crippled leg, Harry is promoted to Detective II and given a desk job.
The next morning, as Jack heads to work, a city bus explodes in front of him, killing the driver. Payne calls Jack on a nearby pay phone, revealing he is alive, his disgust with Jack for ruining his elevator hostage scheme, and that he has rigged another bus to explode. Once the bus reaches 50 mph, the bomb will be armed. If it drops below 50, it will explode. In addition, Payne will detonate the bus manually if anyone gets off the bus, or if the ransom is not delivered on time. Jack locates the bus and jumps aboard, but the bomb has already been armed.
When Jack identifies himself as a police officer in an attempt to calm the passengers, one man draws a gun, believing Jack has come to arrest him. He accidentally shoots the driver, Sam (Hawthorne James), as he struggles to escape. Another passenger, Annie Porter, takes the wheel. Annie is left to drive the bus throughout the city while keeping it above the necessary speed and avoiding other cars. Jack is in contact with the officer in charge of his SWAT section, Lieutenant II "Mac" McMahon, who arranges an escort and directs them around the city from the air to try to get them away from traffic. News of the bomb on the bus quickly makes the TV broadcasts and soon there is a long line of police cars and news choppers trailing the bus, which has been routed onto the Interstate 105 freeway which is still under construction. Jack negotiates for the wounded bus driver to be evacuated from the moving bus. However, when Payne witnesses a terrified passenger named Helen trying to get off as well, he detonates a small bomb under the steps. This causes Helen to fall under the bus, where she is crushed beneath the wheels.
The bus comes to a 50 ft (15 m) gap in the elevated highway, but by increasing speed the bus launches over the gap. After that, they drive to the Los Angeles International Airport where they can safely maintain their speed by driving in circles on the runway. Jack goes under the bus on a sled to try and defuse the bomb, but when the sled loses control he tries to grab hold of the bus and accidentally ruptures the fuel tank with a screwdriver.
Meanwhile, Detective Harry Temple, Jack's partner, realizes that the as-yet-unidentified bomber is using a device different to that of the elevator, which is strange since terrorists usually stick to the type of bomb that they are familiar with and avoid variety. The man also knows all about the methods the police use to dismantle explosives. This leads Harry to conclude that the bomber is an ex-cop who was unsatisfied with the pension he received after his years of service. Payne is identified and Harry leads a raid on his residence. But Payne is not at home and has in fact rigged the house with a bomb that blows it up with the team inside.
Jack then discovers that Payne is monitoring the bus with a hidden camera. Using a news van, his colleagues are able to find the video feed and record it. The news team loops the footage being transmitted to Payne while the passengers are safely evacuated. Jack rigs the bus to keep going in circles so he and Annie can get off by riding on the bus' floor panel. The bus crashes into a fully fueled cargo plane and is destroyed in a spectacular explosion. Jack begins to fall in love with Annie, but she warns him that relationships started in intense situations tend not to last.
The police plan to catch Payne picking up the ransom money since he is at first unaware of the evacuation and destruction of the bus. However, Payne soon discovers the feed that is being looped and realizes that everyone has gotten off the bus safely. Nevertheless, disguised as a police officer, he kidnaps Annie off of the street, then escapes into the subway where he collects the ransom money that dropped through a cleverly concealed hole beneath the designated trash can.
He wires Annie with a bomb. Jack pursues them and follows Payne onto the top of the subway car, after the conductor is shot to death. Then, a fight ensues. Payne is killed when a tunnel light hits his head; decapitating him. Jack disarms Annie's bomb but cannot stop the train, as the control panel was damaged by a bullet during the fight. Noticing a sharp curve in the track ahead, Jack, in a counter-intuitive move, decides to accelerate the train to intentionally derail it, rather than have the train crash into the barrier at the end of the line. Despite Annie's pleas for him to get out and save himself, Jack refuses, and stands by her, something that visibly touches Annie. The train successfully derails breaking through a wall where it comes to rest on Hollywood Boulevard.
Jack and Annie begin a relationship despite that it began under intense circumstances and kiss as shocked civilians watch.