The film opens in prologue: with a pregnant woman being rushed into a hospital in labor and bleeding, reaching out for something or someone unseen. The doctors have to perform a C-section on her to save the baby, but she dies.
The film then flashes forward to a wild night with a seductive woman (Traci Lords) who leads a young man to a rave club, below a slaughterhouse. He at first has fun, but he notices other people staring at him. He casually bumps into the club owner, later revealed to be Deacon Frost (Stephen Dorff), a young upstart in the vampire community. The music peaks when blood is sprayed out from the sprinklers above (a blood rain), and most of the people reveal themselves to be vampires. In the middle of the carnage, the armor clad vampire-hunter Eric "Blade" Brooks (Wesley Snipes) arrives and expertly slaughters a number of vampires in the club, leaving Frost's right-hand man Quinn alive and horribly burned as the police arrive on the scene.
While Quinn's body is being examined in the hospital, he awakens and kills the examiner by biting his neck. Blade tracks Quinn down to a hospital, but he is able to bite a resident hematologist, Dr. Karen Jenson (N'Bushe Wright), before escaping once again after Blade severs his arm. In an act of mercy, Blade brings the injured Karen back to his lair and introduces her to Abraham Whistler (Kris Kristofferson), his mentor and weaponsmith. Karen resolves to study vampirism and find an antidote before she becomes a vampire herself. In working to find a stable, viable cure, she soon discovers that the anticoagulant EDTA reacts explosively with the vampire infection.
Meanwhile, Frost clashes with his vampire elders of the House of Erebus. He believes that vampires should rise from the shadows and enslave humanity while the elders believe in the subversive rule of (both human and vampire) society through their influence with police, politics, finance and real estate. Moreover, because he was not born a vampire as they were, Frost is shunned for his radical views and reckless activities. Frost studies ancient vampire lore and comes to believe that he can awaken La Magra, the Blood God, to gain absolute power. Together with his minions, he kidnaps, mutilates and kills the chief vampire of the region by exposing him to the sun, and imprisons the others.
Blade combats Frost's various minions in an effort to uncover his ultimate plan. After another encounter with Quinn and Frost's lover Mercury, Whistler explains to a suspicious Karen that Blade's mother, Vanessa, was attacked while pregnant and that Blade is a half-vampire hybrid with all their superhuman strengths but none of their weaknesses except the bloodthirst. After witnessing Whistler give Blade a serum to counter the thirst, Karen successfully develops an antidote to cure herself of vampirism. While Blade is out on an errand, Frost and his crew manage to invade Blade's lair, kidnap Karen and mortally wound Whistler.
Blade gives the infected and horribly beaten Whistler a gun to commit suicide, then arms himself with a number of weapons and a large supply of EDTA. He storms Frost's penthouse, overrunning the bodyguards, and soon discovers Vanessa -- his own mother, whom he believed long dead -- in Frost's bed. She reveals that Frost was the vampire that bit her while she was pregnant with Blade and caused him to become the Daywalker. More guards arrive and attack Blade as Frost intimates a long since sexual relationship with Vanessa and proclaims himself as creator of their "family". Thunderstruck, Blade is defeated and taken (with Karen) to the Temple of Eternal Night for Frost's blood ritual sacrifice.
The temple antechamber drains Blade's blood and filters it through the ancient channels of the temple. Karen escapes the pit where Frost had put her and feeds Blade her blood, thereby restoring his strength. Frost sacrifices the elder vampires in a mystic ritual and painfully gains the power of La Magra. However, the unintended result was not the awakening of the bloodgod, but the culmination of the dead elders' souls that fought absorption as the energies consume Frost's body. Vanessa attacks Blade forcing him to kill her.
In the melee, Karen secures a shotgun from a guard, shoots him dead and kills Mercury with concentrated garlic spray. Blade furiously cuts through Quinn and Frost's minions before engaging Frost. Frost's new powers make him immune to Blade's conventional weapons, so Blade injects him multiple times with EDTA, causing Frost to explode. As the pair leave the temple, Karen offers to cure Blade but he chooses to forgo the cure in order to continue hunting vampires and asks her to develop a better serum. An epilogue finds Blade observing a vampire attacking his date in Russia, indicating that Blade's new campaign has spread into Europe.