In 2154, the RDA corporation is mining Pandora, a lush, Earth-like moon of the planet Polyphemus, in the Alpha Centauri system. Parker Selfridge (Giovanni Ribisi), the administrator, employs former marines as mercenaries to provide security. The humans aim to exploit Pandora’s reserves of a valuable mineral called unobtanium. Pandora is inhabited by the Na’vi, a paleolithic species of sapient humanoids with feline characteristics. Physically stronger and several feet taller than humans, the blue-skinned indigenes live in harmony with Nature and worship a mother goddess called Eywa.
Humans cannot breathe Pandora’s atmosphere. In order to move about Pandora, human scientists have genetically engineered human-Na’vi hybrids called avatars, which are controlled by genetically matched human operators. Jake Sully (Sam Worthington), a paraplegic former marine, arrives on Pandora to replace his murdered twin brother, an avatar operator. Dr. Grace Augustine (Sigourney Weaver), the head of the Avatar Program, considers him an inadequate replacement for his brother, relegating him to a bodyguard role.
While Jake escorts Augustine and biologist Norm Spellman (Joel David Moore) on an exploratory mission in their avatar forms, the group is attacked by a large predator, and Jake becomes separated and lost. Attempting to survive the night in Pandora’s dangerous jungles, he is rescued by Neytiri (Zoë Saldaña), a female Na'vi. Neytiri brings Jake back to Hometree, which is inhabited by Neytiri’s clan, the Omaticaya. Mo'at, (C. C. H. Pounder), the Na'vi shaman and Neytiri's mother, instructs her to teach him their ways.
Colonel Miles Quaritch (Stephen Lang), leader of the security forces, offers to get Jake his "real legs" back in exchange for intelligence about the natives and learning what it will take to make them abandon Hometree, which rests above a large deposit of unobtanium.
Over three months, Jake grows close to Neytiri and the Omaticaya and begins to prefer the life he lives through the avatar. Jake's attachment erodes his loyalty toward the humans, and when he's initiated into the Na'vi tribe, he and Neytiri choose each other as mates. Jake's change of loyalty is revealed when he disables a bulldozer's cameras as it destroys the tribe's sacred Tree of Voices. Col. Quaritch disconnects Jake from his avatar and presents Selfridge and Augustine with a vlog in which Jake has admitted that his mission is fruitless; that the humans have nothing the Omaticaya consider valuable and that they will never abandon Hometree. Selfridge is convinced that negotiations would be fruitless and orders Hometree's destruction.
Augustine protests, and Selfridge gives Jake one hour to convince the Na’vi to leave before Col. Quaritch’s forces arrive. When he reveals his mission to the Omaticaya, Neytiri accuses him of betraying them, which results in Jake and Augustine's imprisonment. Jake’s time runs out and Quaritch’s forces destroy Hometree. Eytucan (Wes Studi), Neytiri's father and clan chief, and many others are killed in the attack. Jake and Augustine are disconnected from their avatars and detained for treason. Trudy Chacon (Michelle Rodriguez), a security force pilot who is disgusted by the violence, breaks them out but Augustine is wounded by Quaritch. With Augustine dying, Jake turns to the Omaticaya for help. To regain their trust, he tames the Toruk, an immensely powerful flying beast that only five Na'vi have ever tamed. Jake flies to the Omaticaya, who have gathered at the sacred Tree of Souls, and pleads with Mo'at to heal Augustine. They attempt to transplant her soul into her avatar, but her injuries are too severe.
With the assistance of Neytiri and Tsu'Tey (Laz Alonso), the new leader of the Omaticaya, Jake assembles thousands of Na'vi from other clans. Jake prays to Eywa to intercede on behalf of the Na'vi in the coming battle. Col. Quaritch, seeing the Na'vi's growing strength, orders a preemptive strike on the Tree of Souls, as it is the center of Na'vi religion and culture; its destruction would leave the Na'vi too demoralized to continue resisting.
As the humans attack, the Na'vi fight back fiercely but suffer heavy casualties, among them Trudy. As the Na'vi are on the verge of defeat, the Pandoran wildlife suddenly attacks the humans, overwhelming them. Neytiri interprets this as Eywa answering Jake's prayer.
Quaritch orders the bombing of the Tree of Souls but Jake destroys the bomber before it can reach its target. Quaritch escapes in an AMP (Amplified Mobility Platform) suit. He finds the avatar interface pod where Jake's human body is located and attacks it, exposing Jake to Pandora's atmosphere. Neytiri kills Quaritch and saves Jake, seeing his human form. With the attack successfully repelled, Jake and Neytiri reaffirm their love for each other.
The humans are expelled from Pandora, while Jake and his friends remain. The film ends with Jake's soul being successfully transplanted by Eywa into his Na'vi avatar.
