MI6 sends James Bond, agent 007, into the field to spy on a terrorist arms bazaar on the Russian border. Via television, MI6 and the Royal Navy identify several wanted men, including American "techno-terrorist" Henry Gupta, who is buying a GPS encoder made by the U.S. military. Despite M's insistence to let 007 finish his reconnaissance, British Admiral Roebuck launches a missile attack on the arms bazaar. Bond then discovers two Soviet nuclear torpedoes mounted on an L-39 Albatros, but because the missile is too far along to be aborted, 007 hijacks the L-39 and flies away seconds before the bazaar is struck. Amidst the confusion, Gupta escapes with the encoder.
Media baron Elliot Carver, head of the Carver Media Group Network (CMGN), soon begins his plans to use the encoder to provoke war between China and the United Kingdom, hoping to replace the current Chinese government with one more supportive to Carver's plans of exclusive broadcast rights in their country. Meaconing the GPS signal using the encoder, Gupta sends a British frigate, the HMS Devonshire, off-course into Chinese-held waters in the South China Sea, where Carver's stealth ship, commanded by Mr. Stamper, sinks the frigate with a sea drill and steals one of its missiles, while shooting down a Chinese J-7 fighter jet sent to investigate the British presence, and killing off the Devonshire's survivors with Chinese weaponry. After reading a CMGN report of the incident as a Chinese attack, a government minister orders Roebuck to deploy the British Fleet to recover the frigate, and possibly retaliate, while leaving M only forty-eight hours to investigate its sinking.
M sends Bond to investigate Carver, due to Carver Media releasing their news articles with critical details hours before the events had become known, along with MI6 noticing a spurious signal from one of his CMGN communications satellites when the frigate was sunk. Bond travels to Hamburg and seduces Carver's wife, Paris, an ex-girlfriend, to get information that would help him enter Carver's newspaper headquarters. After Bond steals back the GPS encoder, Carver orders Paris and Bond killed. Paris is killed by Dr. Kaufman, Mr. Stamper's teacher on Chakra Torture, but Bond shoots Kaufman and escapes, protecting the encoder. Bond, after visiting the Americans and learning that the encoder had been tampered with, goes to the South China Sea to investigate the wreck (which was actually in Vietnamese waters), discovering one of its cruise missiles missing. He and Wai Lin, a Chinese spy on the same case, after avoiding being trapped in the sunk ship, are captured by Stamper and taken to the CMGN tower in Ho Chi Minh City, but soon escape and decide to both collaborate on the investigation.
The two contact the Royal Navy and the People's Liberation Army Air Force to explain Carver's scheme; Carver plans to use the stolen missile to destroy the Chinese government at the National People's Congress, and allow Chinese general Chang (who secretly works with Carver) to step in and stop war between Britain and China, but only after both countries destroy each other's navies. They find Carver's stealth ship in Ha Long Bay, which had been built with stolen stealth material, and board it to prevent him from firing the stolen British cruise missile at Beijing. During the attempt, Wai Lin is captured, forcing Bond to devise a second plan. Bond captures Gupta to use as his own hostage, but Carver kills Gupta, claiming he has "outlived his contract"; in retaliation, Bond detonates an explosive which damages the ship, causing it to be visible to radar both Chinese and British navies, who had just been warned of the plot, and thus making it vulnerable to a subsequent Royal Navy attack. While Wai Lin disables the engines, and is captured by Stamper, Bond attempts to halt the missile. After killing Carver with his own sea drill, Bond attempts to destroy the warhead with detonators, but Stamper appears and attacks him after sending Wai Lin into the waters to drown. Bond traps Stamper in the missile firing mechanism and dives to save Wai Lin as the missile explodes, destroying the ship and killing Stamper. Bond and Wai Lin survive amidst the wreckage as HMS Bedford searches for them.