Three MI6 agents, including one "on loan" to the American government, are killed within 24 hours, under mysterious circumstances, while monitoring the operations of Dr. Kananga, the dictator of a small Caribbean island, San Monique. James Bond, agent 007, is sent to New York to investigate the first murder. Kananga is also in New York, visiting the United Nations. Just after Bond arrives, his driver is shot dead by Whisper, one of Kananga's men, while taking Bond to meet Felix Leiter of the CIA. Bond is nearly killed in the ensuing car crash.

A trace on the killer's licence plate eventually leads Bond to Mr. Big, a ruthless gangster who runs a chain of Fillet of Soul restaurants throughout the United States. It is here that Bond first meets Solitaire, a beautiful virgin tarot expert who has the ability to see both the future and remote events in the present. Mr. Big, who is actually Kananga in disguise, demands that his henchmen kill Bond, but Bond overpowers them and escapes unscathed. Bond flies to San Monique, where he meets Rosie Carver, a CIA double agent. They meet up with a friend of Bond's, Quarrel Jr., who takes them by boat to Solitaire's home. Bond suspects Rosie of working for Kananga. She is shot dead, remotely, by Kananga, to stop her confessing the truth to Bond. Inside Solitaire's house, Bond uses a stacked tarot deck of cards, that show only "The Lovers", to trick her into thinking that seduction is in her future, and then seduces her. Solitaire loses her ability to foretell the future when she loses her virginity to Bond, and is forced into cooperating with Bond to bring down Kananga.
Bond and Solitaire escape by boat and fly to New Orleans. There, Bond is captured by Kananga. It transpires that Kananga is producing two tons of heroin and is protecting the poppy fields by exploiting locals' fear of voodoo priest Baron Samedi, and the occult. Through his alter ego, Mr. Big, Kananga plans to distribute the heroin free of charge at his Fillet of Soul restaurants, which will increase the number of addicts. Kananga also believes that other drug dealers, namely the Mafia, cannot compete with his giveaway, to which Kananga can later charge high prices for the heroin, after he has simultaneously cultivated huge drugs dependency and bankrupted his competitors.
When Kananga finds out that Bond slept with Solitaire, he turns her over to Baron Samedi to be sacrificed, as her ability to read tarot cards is gone. Meanwhile, Kananga's one-armed henchman, Tee Hee Johnson, leaves Bond to be eaten by crocodiles at a farm in the Louisiana backwoods. Bond escapes by running along the animals' backs to safety. He sets a drug lab on fire and steals a speedboat. He is then pursued by Kananga's men, as well as Sheriff J.W. Pepper and the Louisiana State Police.
Back in San Monique, Bond rescues Solitaire from the voodoo sacrifice and throws Samedi into a coffin of snakes. Bond and Solitaire escape below ground into Kananga's lair. Kananga captures them both and proceeds to lower them into a shark tank. Bond escapes and forces a shark gun pellet into Kananga's mouth, causing him to blow up like a balloon, float to the top of the cave, and explode.
After the job is done, Leiter puts Bond and Solitaire onto a train and out of the country. Tee Hee Johnson follows Bond and Solitaire onto the train and tries to kill Bond, but loses his prosthetic arm in a fight with him and is flung out of the window. As the film ends, a laughing Samedi is revealed to be perched on the front of the speeding train.