Dominic Cobb (Leonardo DiCaprio) washes up on a beach and is brought by guards into the chamber of an elderly man. The scene then cuts to a dream in the mind of Saito (Ken Watanabe) where Cobb, Arthur (Joseph Gordon-Levitt) and dream world architect Nash (Lukas Haas) are on an extraction mission, in which an individual's mind is infiltrated through dreams and information is stolen. Extractors and their victims sleep in close proximity to one another, connected by a device that administers a sedative and shared a dream world built on their mental projections. In the dream world, pain is psychologically experienced as real, but death results in awakening. Cobb carries a spinning top called a "totem", whose spinning characteristics are known to Cobb only, so that even if someone forces Cobb into a dream, he is not able to simulate that totem spinning accurately. Cobb uses this totem to tell whether he is awake or not. Saito reveals that he is, in fact, auditioning the team to work for him and the mission is aborted. He takes Nash away and asks Cobb to perform the act of "inception" using dreams to secretly implant an idea. Realizing the extraction mission failure and the consequence of being eliminated by their employer, a mysterious firm called Cobol Engineering, they accept Saito's arrangement.
The target is Robert Fischer (Cillian Murphy), son of Saito's terminally ill corporate rival Maurice Fischer (Pete Postlethwaite). The objective is to convince Fischer to break up his father's empire, preventing it from threatening Saito's. Cobb recruits Eames (Tom Hardy), a forger who can change his appearance inside dreams; Yusuf (Dileep Rao), a chemist who develops sedatives; and student Ariadne (Ellen Page), whom he and Arthur train as their new architect. Along the way, Cobb barely escapes Cobol agents out to kill him. Due to the plan involving powerful sedatives and creating multiple dreams within each other, death will not awaken a dreamer but instead send them into a limbo dream world where the mind will be stuck for an indeterminable amount of time. In Cobb's mind, Ariadne discovers that a vision of his deceased wife Mal (Marion Cotillard) continually haunts him, sabotaging his missions. Cobb reveals to Ariadne that he and Mal spent many years in a limbo forging their lives. After waking, Mal remained convinced that she was still in a dream and committed suicide, forcing Cobb to join her by incriminating him in her death. Cobb refused and was forced to flee the U.S. and leave his children to avoid murder charges. In return for completing the mission, Saito promises to clear the charges and reunite Cobb with his children.
When the elder Fischer dies in Sydney, Saito and Cobb's team share the flight with Robert Fischer back to Los Angeles and drug him. They enter his dream, a rainy downtown area, and kidnap him. However, they come under attack by his trained projections, and Saito is badly injured. Eames impersonates Peter Browning (Tom Berenger), Fischer's godfather, to extract information from him. They then enter a van and sleep into the next dream level, a hotel where the team tricks Fischer into believing that the kidnapping on the first level was orchestrated by Browning. Cobb convinces Fischer to enter Browning's subconscious in order to find out his motives, but, in fact, the team enter deeper into Fischer's. The third level is a snowy mountain fortress, which Fischer must break into to reveal the planted idea. Fischer is killed by Mal, causing him to go into limbo. Ariadne and Cobb follow Fischer to this fourth level in an attempt to salvage the mission and confront Mal. Mal attempts to convince Cobb to stay in limbo by making him question his reality as he was chased by agents that could have been projections. Cobb reveals that he planted the idea in Mal's mind to wake, making him indirectly responsible for her suicide. She attacks him, but Ariadne shoots her. Fischer and Ariadne are able to return to the mountain fortress, where he reaches the intended understanding that his father had wanted him to be his own man.
A team member is left behind on each dream level: Yusuf driving the van, Arthur in the hotel, and Eames and Saito in the fortress, to protect those in the next level and fight off Fischer's forces from attacking the bodies. Ultimately, they are running out of time since, at each level, timed "kicks" to help them return to reality are imminent: explosives in the mountain fortress, the hotel elevator carrying the bodies hitting its shaft, and the crashing of the van into a river. A wounded Saito dies at the snow fortress, and Cobb remains in limbo to locate him. Returning to the first scene, in which Cobb locates an aged Saito, he tells him to escape back to reality. Cobb suddenly awakens to find everyone on the plane, including Saito, up and well. Saito honors their arrangement, and Cobb enters the United States, reuniting with his children at home. Cobb spins his totem to test reality but is distracted by the reunion. The top wobbles slightly in its spin, and the scene cuts to black, leaving open the question of whether Cobb is awake or still dreaming.
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