Legend tells you when my friend Kevin Flynn (Jeff Bridges) is a young and gifted software engineer attempting to hack into the mainframe of his former employer, software company ENCOM; in order to find evidence that senior executive Ed Dillinger (David Warner) stole the code for Flynn's games and presented it as his own, earning him a rapid series of promotions and firing Flynn, who is left running an arcade full of games that he wrote originally. Flynn is blocked by the Master Control Program (MCP), an artificial intelligence that controls the ENCOM mainframe. The MCP is hacking into other corporations and gaining control of their programs as well. It blackmails Dillinger, threatening to reveal to the media that he stole Flynn's code when he tries to prevent the MCP from hacking the Pentagon and Kremlin as the MCP says it can "run things 900 to 1200 times better than any human".
When ENCOM employees Alan Bradley (Bruce Boxleitner) and Lora Baines (Cindy Morgan) tell Flynn that Dillinger has tightened security clearances in response to Flynn's hacking attempts, Flynn convinces them to let him into ENCOM so that he can forge a higher security clearance for Bradley's security program "Tron," which would monitor communications between the MCP and the outside world. They take him to the ENCOM laboratory. When Flynn attempts to hack his way into the system, the MCP takes control of a nearby laser, being developed for 'quantum teleportation' and uses it to digitize Flynn into the ENCOM mainframe.
In the mainframe, Programs appear in the likeness of the Users who created them. However, the MCP and its commander, Sark (Warner) have long intimidated most Programs into renouncing their belief in the Users, giving the MCP near complete control over input/output in the system. Programs that refuse to do so are forced to play in gladiatorial games in which losers are destroyed. In the process of playing such games, Flynn meets Tron (Boxleitner); the two escape into the mainframe during a Light Cycle match, and are later split up. While he attempts to reunite with Tron, Flynn discovers that, as a User, he is capable of manipulating the physical laws of the digital world.
Tron manages to communicate with Bradley and receives instructions to destroy the MCP. Tron and another Program, Yori (Morgan), board a solar sailer simulation and make their way toward the MCP core. Flynn boards the sailer just before it departs, and along the way, he reveals his identity as a User. Before they reach the MCP, Sark's command ship destroys the sailer, capturing Flynn and Yori. Sark then leaves the command ship and orders its self-destruction, but Flynn keeps it intact while Sark flies to the MCP's core on a shuttle, carrying a number of captured Programs. Tron, thought to have been killed in the collision, has snuck aboard the shuttle and confronts Sark just outside the core while the MCP tells the Programs of their impending fate. Tron severely damages Sark and attacks the MCP directly, however the MCP raises a shield around its core preventing Tron's disc from hitting it. The MCP restores Sark and transfers its functions to him, causing him to grow to immense size and attack Tron. Flynn then jumps directly into the MCP, distracting it long enough to reveal a gap in its shield. Tron throws his disc through the gap, destroying both the MCP and Sark, and freeing the digital world. Input/Output towers begin to light up all over the landscape as programs begin to communicate with their users.
Flynn is sent back to the real world, reconstructed by the digitization laser. A nearby printer prints out the evidence that Dillinger had "annexed" his code. Dillinger arrives the next morning to find the MCP non-functional, and the evidence of his wrongdoing displayed for all to see. He is no longer at the MCP's mercy, but rather at the mercy of all those he swindled on his way to the top.
Flynn becomes the new CEO of ENCOM. Instead of a mere hello, his customary welcome for Alan and Lora is the same as that which he gave Tron and Yori: "Greetings, Programs!".
In 1989, In 1989, seven years after defeating the Master Control Program, Kevin Flynn (Jeff Bridges), the innovative software engineer and the CEO of ENCOM International, disappears. Twenty years later, his son, Sam (Garrett Hedlund), who became ENCOM's controlling shareholder after his father's disappearance, takes little interest in the company besides an annual practical joke on the board of directors. Sam is visited by his father's friend and ENCOM executive Alan Bradley (Bruce Boxleitner), who urges Sam to investigate a mysterious page originating from Flynn's old arcade, which was disconnected for twenty years. While exploring the shuttered arcade, Sam discovers a concealed computer laboratory and unintentionally transports himself to the Grid, a virtual world inside the computer.
Sam is captured and taken to the game arena, where he is pitted against Rinzler, the champion of the games. During their duel, Rinzler notices that Sam is not a Program but rather a User. Rinzler takes Sam before CLU, a digital copy of Kevin Flynn, who rules over the Grid. CLU nearly kills Sam in a Light Cycle match before Quorra (Olivia Wilde) rescues him. Taken to a distant, off-grid hideout in the "Outlands," Sam is reunited with his father.
Flynn then reveals to Sam that he had been working on a new, "perfect" system and had appointed CLU and Tron, a security program created by Alan Bradley from the first film, as its co-creators. After much work, Flynn discovered a new series of sentient "isomorphic algorithms" (ISOs), self-produced Programs that spontaneously evolved in the system, which carried the potential to unlock mysteries in science, religion, and medicine. CLU considered these Programs to be an imperfection so he betrayed Flynn, defeated Tron (who sacrificed himself to give Kevin enough time to escape) and purged the ISOs in a genocide, declaring the system under his control. Flynn also revealed that while he hid from CLU, the portal back to the real world had closed, making him captive of his own creation until Sam re-opened it from the outside.
Resolving to make it back to the real world where he would be able to delete CLU, Sam makes his way back onto The Grid to find a Program named Zuse, who he believes can provide safe passage to the portal. The End of Line Club owner, Castor (Michael Sheen), reveals himself to be Zuse and, instead of helping Sam, betrays him to CLU's guards. Though Flynn and Quorra arrive just in time to help Sam escape, Quorra is grievously wounded and Zuse gains possession of Flynn's identity disc. Knowing the disc works as a master key to The Grid, Zuse attempts to use it to bargain with CLU, but CLU simply takes it and destroys the club. Flynn and Sam save the injured Quorra and stow away aboard a freighter heading towards the portal. While Flynn heals Quorra, he reveals her to be the last surviving ISO.
The three unexpectedly arrive at a station aboard a massive warship and encounter Rinzler. As Quorra attempts to distract him, Flynn recognizes Rinzler as Tron, having been reprogrammed by CLU to serve him. Elsewhere on the ship, CLU addresses his army, expressing his desire to enter the real world and "perfect" it. Sam saves Quorra from Rinzler and reclaims Flynn's disc. The trio then commandeer an aerial shuttle and escape, but CLU, Rinzler and several guards pursue them in Light Jets. Between Quorra's evasive flying and Sam manning the rear turret, the three manage to shoot down the guards. As Rinzler moves to destroy the shuttle, he makes eye contact with Flynn and his original identity as Tron suddenly resurfaces. Declaring that he fights for the Users, Tron deliberately collides with CLU's Light Jet, destroying both vehicles. As the two fall, CLU wrestles away Tron's spare baton, creates another Light Jet, and continues to the portal. Tron falls into the Sea of Simulation, where his armor reverts to its original blue.
Sam, Flynn and Quorra finally reach the portal, only to find CLU blocking their path. After attempting to reason with CLU, Flynn sacrifices himself to end the impasse, pulling CLU toward him and causing the two to merge, while Sam and Quorra use Flynn's disc to travel through the portal back to the real world. Flynn and CLU's merger causes a massive explosion that destroys them both, as well as CLU's army and his warship.
Back in the basement of Flynn's arcade, Sam backs up the system onto his flash drive and powers it off, holding the Grid's data on a computer chip around his neck. He then meets Alan and tells him that he will start working at ENCOM, and, as the controlling interest shareholder, he will name Alan chairman of the board. Quorra meets Sam outside, and the two take off on his motorcycle. The movie ends with Sam showing Quorra the sunrise she has longed to see.
