Inside The Hive, a top-secret genetic research facility owned by the Umbrella Corporation located beneath Raccoon City, a thief throws a blue virus called the t-virus in a lab, exits and seals the room. The t-virus breaks and the facility's artificial intelligence, The Red Queen, detects possible infection. In response it seals the Hive and uses the facility's fire suppression system to kill everyone inside.
Alice (Milla Jovovich) awakens in an empty mansion with amnesia. She and a police officer, Matt (Eric Mabius), are seized by a group of commandos and taken to an underground train station that leads to The Hive. The group discovers Spence (James Purefoy), also suffering from amnesia. The head of the commandos, "One" (Colin Salmon), explains that everyone in the group except Matt is an employee of the Umbrella Corporation. The Red Queen released a nerve gas in the mansion that caused their amnesia. When the group arrives at the train the group boards it and enters The Hive.
The group finds their way to The Queen's chamber, but the core is protected by a laser defense system. Four of the commandos, including One, are killed. The only commandos left alive are Rain (Michelle Rodriguez), Kaplan (Martin Crewes), and J.D. They enter the core room with an EMP device designed to disable The Queen. The AI manifests itself as a holographic image of a young girl and pleads with them not to disable it, claiming that if they do many bad things will happen. The Queen's warnings are ignored; the system is disabled and primary power fails which opens the doors of the facility, releasing the zombified staff and other experiments into The Hive. During a battle between the group and some of the zombies, Rain becomes infected after receiving bite wounds while trying to save J.D. As the group moves through The Hive Alice and Spence regain their memories. Matt and Alice are separated from Kaplan, Rain, and Spence, who remain near The Queen's chamber. Matt looks for information about his sister while Alice encounters several dogs that were experimented on and surprises herself when she uses martial arts to defend herself.
Matt finds his sister, Lisa (Heike Makatsch), who is a zombie. As she attacks him Alice arrives in time to save him by killing her. Matt explains that he and Lisa attempted to smuggle out a sample of the blue vial, the T-Virus, to take down Umbrella. Matt believes this to be the fault of Lisa's contact, who supposedly betrayed her. Alice remembers she was Lisa's contact, but does not tell Matt. The survivors reunite at The Queen's chamber. Alice turns The Queen back on in order to find an exit; the Red Queen agrees to help them. As Alice and the others try escaping through the maintenance tunnels, they are ambushed by zombies. Kaplan is separated from the rest of the team as pipes collapse while the group is walking over them. Alice remembers that an anti-virus exists that could cure the T-Virus infection, which is the green liquid in the vials.
At the lab they find the vials containing the T-Virus and anti-virus are gone. Spence regains his memory and realizes he was the person who stole and released the virus. He stashed the vials on the train. Spence traps the survivors in the lab by shooting off the lock, then heads toward the train. Before he can inject himself with the anti-virus he is killed by a mutated creature called a Licker. The Licker is described as "one of the Hive's early experiments produced by injecting the T-Virus directly into living tissue". The Queen offers to spare Alice and Matt if they kill Rain, who has been infected for too long for the anti-virus to work. As the Licker attempts to bash through the lab window to get to them, Rain tells Alice to chop off her head with an axe. After Alice smashes the monitor which the Red Queen was using to talk to them, a power-outage occurs. The laboratory door opens to reveal Kaplan, who has disabled the Red Queen.
The four survivors start the train before The Hive is locked in quarantine. As the train heads back to the mansion, the Licker hurls Kaplan from the train after ripping out the door next to him. Alice battles the Licker as Matt kills a now zombified Rain. After being clawed by the Licker, Matt opens a door in the floor of the train, causing the Licker to be dragged along the track and burned to death. Matt and Alice arrive at the mansion, escaping before the doors close. Matt begins mutating due to his wounds. Before Alice can give him the anti-virus the mansion doors burst open and Umbrella scientists seize them. They subdue Alice and take Matt away, revealing he is to be put into the "Nemesis Program" and they intend to re-open the Hive. Alice attempts to fight them off, but is overpowered and knocked unconscious.
Alice awakens at the Raccoon City Hospital locked in an observation room. After escaping the room, Alice exits the building to find Raccoon City abandoned with signs of chaos everywhere. A newspaper clipping shows that the T-Virus spread to the surface after Umbrella reopened the Hive, creating an army of undead which devastated the city within hours. Alice arms herself with a shotgun from a nearby police car as the film ends.
