While on a fishing trip, Sméagol's cousin Déagol finds the One Ring in a river. Sméagol kills Déagol for the Ring and flees into a cave, becoming the creature Gollum under the Ring's corruption.
Five centuries later, Gandalf, Aragorn, Legolas, Gimli, Théoden, Gamling, and Éomer meet up with Merry, Pippin and Treebeard at Isengard. The group returns to Edoras, where Pippin looks into Saruman's recovered palantír, in which Sauron appears and invades his mind; Pippin tells him nothing regarding Frodo and the Ring. From this event, Gandalf deduces that Sauron is planning to attack Minas Tirith. Gandalf rides with Pippin to find Denethor, the Steward of Gondor, to whom Pippin swears his service. Gandalf urges Denethor to call Rohan for aid, but Denethor declines, fearing Aragorn and Gandalf plan to depose him. The Morgul army, led by the Nazgûl, drives the Gondorians out of Osgiliath. Denethor sends his son Faramir on a suicide mission to reclaim the city. Under instruction from Gandalf, Pippin evades city guards to light the distress beacon, signalling Théoden and Aragorn to assemble the Rohirrim for battle.
Elrond informs Aragorn that Arwen did not go to the Undying Lands, and is now dying. Believing their forces to be outnumbered by Sauron's, Elrond gives Aragorn the sword Andúril to acquire the service of the Army of the Dead, who owe allegiance to the heir of Isildur. Éowyn confesses her love for Aragorn and asks him not to go, but Aragorn reaffirms his love for Arwen and heads into battle. Accompanied by Legolas and Gimli, Aragorn ventures into the Paths of the Dead and gains the loyalty of the King of the Dead and his men by brandishing Andúril, proving himself the Heir of Isildur. At Dunharrow, Théoden rides off to war, unaware that Éowyn and Merry have secretly joined his forces.
Sauron's armies lay siege to Minas Tirith, led by the Witch-king. Believing a grievously wounded Faramir to be dead, Denethor tries to burn his son and himself alive, but Gandalf intervenes; he saves Faramir, but Denethor commits suicide by jumping off the front of Minas Tirith. Just as the Gondorians are about to be overrun, the Rohirrim army arrives and counter-attacks in a massive cavalry charge led by Théoden. This shifts the tide of the battle, and the Orcs begin to retreat. However, Haradrim warriors arrive to reinforce the Orc army with their Oliphants, turning the tide. The Witch-king kills Théoden, only to be wounded by Merry and finished off by Éowyn. On the verge of defeat, the Rohirrim are saved when Aragorn, Legolas, and Gimli arrive with the Army of the Dead and overwhelm Sauron's forces, ending the battle. Aragorn frees the Army of the Dead and their souls go to the afterlife.
Meanwhile, Frodo, Sam and Gollum travel to Minas Morgul. Sam overhears Gollum's plans to murder them and take the Ring for himself but an oblivious Frodo refuses to believe him. Hoping to remove Sam as an obstacle, Gollum secretly tosses their precious food supply over a cliff and persuades Frodo that Sam wants the Ring for himself. Frodo angrily tells a heartbroken Sam to go home, who initially leaves, but discovers Gollum's treachery and follows after them. Gollum betrays Frodo and disappears, leaving him in the lair of the giant spider Shelob, who paralyses Frodo before being wounded and driven away by Sam. An Orc patrol captures Frodo and takes him to Sauron's fortress. Sam rescues Frodo from the tower, and they continue the journey to Mount Doom.
Meanwhile, Aragorn leads his remaining men to the Black Gate of Mordor, distracting Sauron and his forces and allowing Sam and Frodo to enter Mount Doom. As Sam carries the weakened Frodo up the volcano, Gollum reappears and attacks them but they manage to evade him. At the Crack of Doom, Frodo succumbs to the Ring's power, refusing to destroy it. Having followed them, Gollum attacks Frodo, biting his finger off and seizing the Ring for himself. An enraged Frodo attacks Gollum, and they both fall over the edge. At the last second, Frodo grabs onto the ledge, leaving Gollum to fall into the lava to his death, taking the Ring with him. As the Ring melts in the volcano, Sauron is destroyed and the land of Mordor collapses, taking down most of his forces.
Frodo and Sam are saved from the rising lava by Eagles, led by Gandalf. In the aftermath, Aragorn is crowned King, heralding a new age of peace, and marries Arwen while the four hobbits are bowed to by all of Gondor for their courageous efforts. The four Hobbits return home to the Shire, where Sam marries his childhood sweetheart. Four years later, Frodo leaves Middle-earth for the Undying Lands with Gandalf, Bilbo,now very old and weak, Elrond, Celeborn, and Galadriel, and the Fellowship had ended and Sam was given The Red book of Westmarch to finish.