Where Tokyo is rebuilt – now known as Neo-Tokyo – but is plagued by corruption, anti-government protests, terrorism, and gang violence and is on the verge of collapse. During a large protest, the hot-headed Shōtarō Kaneda leads his vigilante bōsōzoku gang, the Capsules, against their rivals, the Clowns. Kaneda's best friend, Tetsuo Shima, inadvertently crashes his motorcycle into Takashi, an esper who escaped from a government laboratory with the aid of a resistance organization. The accident awakens psychic powers in Tetsuo, attracting the attention of a secret government project directed by Japan Self-Defense Forces Colonel Shikishima. Assisted by esper Masaru, Shikishima recaptures Takashi, takes Tetsuo with him, and arrests Kaneda and his gang. While being interrogated by the police, Kaneda meets Kei, an activist belonging to the resistance movement, and tricks the authorities into releasing her and his gang.
Shikishima and his head of research, Doctor Ōnishi discover that Tetsuo possesses powerful psychic abilities similar to Akira, the esper responsible for Tokyo's destruction. Takashi's fellow esper, Kiyoko, forewarns Shikishima of Neo-Tokyo's impending destruction. Neo-Tokyo's parliament dismisses Shikishima's concerns, so he considers killing Tetsuo to prevent another cataclysm. Tetsuo escapes from the hospital, steals Kaneda's motorcycle, and prepares to run away from Neo-Tokyo with his girlfriend Kaori. The Clowns ambush them, and the Capsules intervene. While the Capsules are apprehending them, Tetsuo suffers headaches and hallucinations, and he is taken back to the hospital. Researching Tetsuo, Kaneda finds Kei and joins her resistance cell after overhearing their plan to rescue Tetsuo and the other espers. At the hospital, the espers confront Tetsuo as he aggressively fights back with his psychokinetic powers, which make him egomaniacal and unstable; he escapes again. Kaneda, Kei, and the resistance group infiltrate the hospital and are drawn into Shikishima and the espers' attempt to stop Tetsuo. He overpowers them all and leaves the hospital after learning from Kiyoko that he can gain help from Akira, located in cryonic storage beneath the Olympic Stadium's construction site.
Kei and Kaneda escape military custody thanks to Kiyoko, who is hoping to stop Tetsuo. Shikishima stages a coup d'état against the Neo-Tokyo government and directs all of its military forces to destroy Tetsuo. Returning to the Capsules' former hangout to obtain drugs to control his powers, Tetsuo murders Yamagata in front of Kai; upon discovering this, Kaneda vows to avenge him. Tetsuo rampages through Neo-Tokyo, arriving at Akira's cryogenic storage dewar in the stadium. Kiyoko has Kei fight Tetsuo. He easily defeats her and exhumes Akira's remains. Using a laser rifle, Kaneda fights Tetsuo in a duel; Shikishima fires an orbital weapon at him, but it fails.
Shikishima and Kaori approach the stadium; Tetsuo is in great pain and losing control over his powers. Shikishima offers to return Tetsuo to the hospital, heal his injuries, and help control his abilities, while Kaori attempts to restrain Tetsuo. However, Kaneda arrives and duels with Tetsuo once again. Losing control of his powers, Tetsuo mutates into a gigantic mass consuming all matter, engulfing Kaneda and killing Kaori. As the mass grows, the espers awaken Akira to stop it. After reuniting with his friends, Akira creates a singularity that draws Tetsuo and Kaneda into another dimension. The espers teleport Shikishima to a safe distance as the singularity destroys Neo-Tokyo in a mirror of Tokyo's previous destruction, and they agree to rescue Kaneda, knowing that they will not be able to return to this dimension.
In the singularity, Kaneda experiences Tetsuo's and the espers' childhood, including Tetsuo's dependence on Kaneda during their childhood, and how the children were trained and altered before Tokyo's destruction. The espers return Kaneda to his world, informing him that Akira will take Tetsuo to safety and that Kei is developing psychic powers. The singularity disappears and water floods the city. Ōnishi is crushed to death when the laboratory collapses on him. Kaneda discovers that Kei and Kai have survived, and they drive off into the ruins, while Shikishima watches the sunrise. Finally, Tetsuo introduces himself at another unspecified level of existence.